The tax office was in a negotiation process with the tech firms to ensure that they were “ready and comfortable” to impose VAT on their Indonesian customers, spokesman Hestu Yoga Saksama said during a discussion held by the Center for Indonesian Policy Studies (CIPS).

“We are convinced that more tech firms will collect VAT this year,” Hestu told the discussion on Thursday. However, he declined to name the companies or reveal how much the government expected to earn from such policy.

Under the new rules, nonresident foreign firms that sell digital products and services in Indonesia worth at least Rp 600 million ($41,038) a year or generate yearly traffic from at least 12,000 users will be required to pay the 10 percent VAT.

The over-the-top (OTT) technology firms appointed by the tax office as VAT collectors are expected to start collecting the taxes in August. The VAT is imposed on sales of tech firms including Amazon Web Services, Netflix, music streaming service Spotify as well as Alphabet’s Google for its Google Asia Pacific, Google Ireland, and Google LLC units.

The government has been struggling to collect more revenues to fund its widening budget deficit of 6.34 percent of the gross domestic product (GDP) as the COVID-19 pandemic hits businesses, which prompted the government to provide Rp 120 trillion worth of tax incentives.

The tax office is looking to bolster revenue in the second half of the year after recording Rp 531.7 trillion revenue in the first half, down 12 percent compared to the same period last year and around 44 percent from this year’s tax revenue target.

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