Netflix does not pay tax in Indonesia despite earning significant revenue from local subscribers, according to Melani Dewi Astuti, senior international tax analyst at the Ministry of Finance.

She said this is because Indonesia lacks a legal basis to tax digital service companies without a physical presence in the country.

Users in Indonesia pay Netflix subscription fees directly to the company’s offices in Singapore or the Netherlands.

In contrast, companies like Apple and Google, which have a physical presence in Indonesia, are subject to value-added tax (VAT) on user transactions, but not income tax.

Astuti noted that global tax agreements, such as OECD/G20’s Pillar 1, aim to allow countries to tax digital firms based on economic rather than physical presence, but these have not been implemented.

She said the United States’ decision not to join Pillar 1 has stalled its adoption, leaving Indonesia unable to tax income from foreign digital platforms with local users.

🔗 Source: Bisnis.com

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