Indonesian finance minister Bambang Brodjonegoro recently announced that all internet-based services will be required to pay local taxes and obtain “permanent establishment” status. The latter can be in the form of either a representative office or full-fledged company. He compared the arrangement to that already shared by Indonesia and contractors in the oil sector.
A legal decree on the matter is expected by month’s end. After a likely transition period, the government said, it will block internet services that don’t comply, or reduce their bandwidth.
Indonesia has the fourth-largest population in the world, with over 260 million people, and Indonesians tend to adopt social media with gusto. Some 89% of adult internet users (or smartphone owners) use social networking, according to the Pew Research Center, well ahead of the US, Japan, and Germa