Indonesia Wants Netflix to Open Office, Pay Tax

1 min readUpdated May 30, 2025Jan 13, 20163:56 PM

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If Netflix wants to obtain a but, the company must obey local regulations, such as opening an office and hiring employees. Furthermore, it must also obey tax regulations, which means every transaction with Netflix in Indonesia will be taxed.

According to Kompas.com, the obligation to have a business license also applies to other over-the-top Internet-based services, such as Google and Facebook.

These permanent businesses are required to pay corporate income tax and value added tax for every transaction made in Indonesia.

Netflix’s video-streaming service went live in more than 130 countries, including Indonesia, last Wednesday as chief executive Reed Hastings aimed to counter slowing growth in the US.

Indonesian users can choose from three monthly subscription plans on Netflix, with the basic plan priced at Rp 109,000 ($8) per month.

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What this means

Indonesia's aggressive stance demanding Netflix's physical presence and tax compliance represents a significant challenge to the 'light touch' market entry often favoured by digital giants. This move pressures Netflix, which launched last Wednesday to counter slowing US growth, to formalise its operations, a stark contrast to the rapid regional store expansions seen from brands like Miniso in Indonesia or Panpuri across Asia. While the immediate cost impact on Netflix's Rp 109,000 monthly basic plan is unclear, compliance could necessitate price adjustments or strategic operational shifts. This approach also signals a tightening regulatory environment for all foreign digital businesses in Southeast Asia. We should watch for Netflix's official response and any price changes in the coming months.

Wei Zhang

Questions & Answers

What specifically does Indonesia require Netflix to do to operate legally within the country?

Indonesia mandates that Netflix must establish a local office and employ local staff. Also, the company is required to adhere to Indonesian tax regulations, meaning all transactions made there will be subject to taxation.

Are these new regulations solely aimed at Netflix, or do they apply more broadly?

These regulations are not exclusive to Netflix; they also apply to other Internet-based services operating permanently in Indonesia, such as Google and Facebook. These entities must also obtain a business license and pay corporate income tax and VAT.

When did Netflix officially launch its service in Indonesia?

Netflix's video-streaming service became available in Indonesia last Wednesday, as part of a wider launch in over 130 countries. This expansion was aimed at addressing slowing growth experienced in the US market.

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