Netflix has encountered a bumpy ride in Indonesia within days of its launch with the local administration demanding that the provider now set up a legal entity in the country.
“It (Netflix) must have a legal entity in Indonesia as it operates business here,” Communication and InformationTechnology Minister Rudiantara was quoted by Kompas as saying.
The video streaming major will also be subject to paying taxes like other local companies.
By having a permanent establishment, the US-headquartered company will have to comply with the applicable laws in Indonesia, such as owning an office and employing Indonesian citizens. In addition, it has to adhere Indonesian tax law that will apply on every transaction undertaken by Netflix.
The requirement to set up a domestic legal entity also applies to internet-based services providers such as Google and Facebook. They are required to pay corporate income tax and value added tax on business transactions.
Apart from that, the government is also looking to monitor the content on the video streaming platform.
Minister Rudiantara said, Netflix’s presence might affect existing players in the entertainment industry and other online businesses. Hence, his ministry would seek advice from the Culture and Education Ministry to look into the content available on this streaming platform to gauge its impact on society.
“If the disadvantages outweigh the advantages, then something must be done to fix that. We have to study the Netflix entry carefully as we do not want to hinder technology for the sake of the public,” he stated.
However, Rudiantara was confident that the country’s internet infrastructure would be ready, especially mobile broadband networks, to support a service like Netflix.
Film producers showed a mixed response to the entry of Netflix. Some say it may damage local film industry as costumers would be bombarded with Hollywood movies while others welcome the service as it would provide more channels for local film makers to reach out to customers.
Netflix officially entered Indonesian market early January 2016. Currently, it offers free one-month subscription to local customers. Its service is accessible via laptop, desktop computer as well as smartphones and tablets.
Netflix sets subscription rates at Rp 109,000 per month for its basic service, Rp 139,000 a month for its standard service and Rp 169,000 a month for its premium service.
Netflix was founded in 1997 and its service is now currently available in 130 countries.