Indonesia announced on Wednesday its plans to impose a tax on the income generated by technology companies from the country, even if the G20 countries and the Organization for Economic Cooperation and Development cannot reach an agreement on digital taxes.
Meanwhile, Indonesia imposed a 10% value-added tax on the digital offerings of foreign companies from July 1. It has sought to get internet companies to contribute their fair share of taxes for years. The decision to impose VAT was announced in March when President Joko Widodo outlined emergency measures to help the country weather the coronavirus crisis.
Indonesia Reveals Digital Tax
The nation brought into effect its digital services tax in April 2020 and, in a regulation issued on May, revealed its plan to levy a value-added tax on software, multimedia and data. Moreover, the new tax has been linked to post-pandemic budgetary stress, and is clearly a move to mitigate the economic impact of the COVID-19 pandemic.
Later, Canada announced on Tuesday, its plans to impose a tax on corporations providing digital services in 2022 ,according to the Finance Department. The new tax would come into effect on Jan. 1, 2022, and remain in place until a common approach is agreed upon. The measure would raise federal revenues by C$3.4 billion ($2.6 billion) over five years, starting in the 2021-22 fiscal year.
Meanwhile, Finance Minister Chrystia Freeland explained that Canadians want a tax system that is fair, where everyone pays their fair share, as legislators told in the fall economic update. Also, the threat of digital services taxes has prompted threats of trade retaliation from outgoing U.S. President Donald Trump’s administration.
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