Foreign OTT Providers to Be Classified as Permanent Establishments

In an attempt to curtail continuing income-tax losses from profits generated by so-called Over-the-Top players, the Director General of Tax (“Director General”) has issued Circular Letter No. SE-04/PJ/2017 on the Determination of Permanent Establishments for Foreign Tax Subjects Which Are Providers of Applications and/or Content Services Through the Internet (“Circular Letter 4/2017”).In essence, Circular Letter 4/2017 aims to achieve regulatory unification and sets out a number of operating procedures relating to the stipulation of foreign tax subjects who are providers of internet-based applications and/or content services (Foreign Over-the-Top Service Providers/“Foreign OTT Providers”) [1] as Indonesian permanent establishments. [2] To achieve this goal, Circular Letter 4/2017 addresses the following provisions: [3]