Tracing the Implementation of the Steam Game Tax and Other Digital Products in Indonesia

The price of Steam games did not increase, even though the implementation of adding 10% VAT for these games was said to have started on July 1, 2020 yesterday. PC gamers all over Indonesia rejoiced, the fear of not having enough Steam Wallet to buy games on the wishlist has now been erased because it was stated that developers and publishers are the ones who bear the 10% tax. But does it all have a happy ending here?

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That’s what makes us want to explore more deeply how the actual practice of the 10% tax from this game, or whether in the future other digital game marketplaces such as Origin, Epic Games Store, Uplay, etc. will also experience the same thing, and whether other products digital non-gaming will also be affected? And most importantly, is it true that the developer studio or publisher will bear the additional tax for their consumers?

For this reason, we interviewed one “tax observer” who is quite an expert in the field of taxation to explore rumors and facts about the implementation of this 10% tax.

So does this Steam tax apply or not?

In accordance with the previous announcement, the Value Added Tax (VAT) of 10% for every purchase of games/applications on Steam has officially come into effect since July 1, 2020 yesterday. This can be seen on the Steam Tax FAQ page. Where Steam is recorded to collect 10% VAT from every transaction made from every transaction made with customers who are Indonesian citizens.

However, it should be noted that tax-typeit is inclusive for all countries. Which means that Steam previously had a policy that the selling price displayed on the Steam Store always included tax. Hence, for the games purchased for now, the price will not change.

You know, if it’s included taxes from the start, does that mean Steam is corrupting our tax money before?

This is an incorrect statement, because the tax itself is only imposed after the country has a policy to collect taxes. However, because of the inclusive system, Steam will not change the price for the products they have installed in the store.

But as a result, it means that from the price listed on the Steam Store, later, Valve will provide additional discounts for publishers/developers, which means the profits for these publishers/developers will be smaller.

In addition, Steam as we know adopts the regional pricing feature, so publishers/developers can actually increase the price of their games to accommodate VAT in countries like Indonesia.

If it has been deducted from the selling price, does that mean that the publisher/developer will be the one who will bear the 10% VAT?

Technically yes, because in practice this tax collection is carried out by Steam directly by cutting the proceeds from game sales, then it will be deposited to Indonesia according to the PMSE collection and deposit mechanism (Trading Through Electronic Systems) in Indonesia.

But in exchange, publishers / developers still have full rights to set their prices. So if they feel that the price for the Indonesian region is too low, then they have the option to increase the price of their game at any time in the future as stated in the previous point.

So, for local developers, can you get this VAT relief on Steam?

Unfortunately not, because determining this cut is the full authority of Steam. Where the government only sets the amount of VAT that must be paid while the implementation of the product is the right of Valve.

And in this case, it seems that Steam considers all transaction actors / sellers here to be the same, so there is no difference between local developers and foreign developers.

Does that mean that in the future other international digital game stores (Uplay, Origin, Epic Games Store, etc.) operating in Indonesia will be subject to a similar tax?

In accordance with the Regulation of the Director General of Taxes number PER 12/PJ/2020, PMSE business actors must be appointed through the KEP from the Director General of Taxes to be able to collect PMSE VAT. Which means sIndeed, all PMSE transactions are subject to 10% VAT and the decision starts at the same time since it was issued Perpu Number 1 of 2020 yesterday, but here it was Steam who took the initiative to immediately impose a tax levy on its store before being appointed by the Director General of Taxes.

In the end, all these transactions are subject to foreign taxes and doing PMSE must definitely be taxed. This of course includes all service providers from abroad who carry out transactions in Indonesia. Including other digital stores, as well as various other digital services including Netflix, Spotify, Youtube Premium, and the like.

But the difference here is when Steam takes the initiative to collect VAT on PMSE activities through the inclusive price type, which means the price paid by the customer includes VAT. For Netflix it is explained that the system additive so it is very likely that later the price of the subscription package will increase.

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Verdict

And that was Gamebrott’s search for rumors and facts about the application of a 10% tax on Steam games. And it turns out that the game doesn’t increase in the Store when you buy it doesn’t mean that the tax doesn’t happen. Rather it is deducted directly from the profits of the publishers and developers.

But that does not mean that we will always be free, these publishers and developers also have the power to increase the price of their games at any time in the future if they feel that the regional prices set for Indonesia are not able to cover the additional tax on their products.

The 10% VAT system itself is likely to be applied by other digital stores such as Origin, Epic Games Store, Uplay Store, etc. And even according to Perpu Number 1 of 2020 that later all digital services from abroad that carry transactions will be subject to tax, including services such as Netflix, Spotify, etc.

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Don’t forget to also read other interesting info about Steam or other uncommon articles from Galih KA

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