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Indonesia To Hike Tax On 2G Mobile Handsets

by Mary Swire, Tax-News.com, Hong Kong

28 May 2015


The Indonesian Government intends to increase tax on the sale of second generation (2G) mobile telephone handsets in order to encourage users to switch to more advanced 4G systems, according to Communications and Information Minister Rudiantara.

The Indonesian Government is keen to encourage greater take-up of 4G services in a country where the majority of users still prefer to use older 2G handsets. It is hoped that by making 2G handsets more expensive and reducing the price gap to 4G devices, people will switch to using the latest mobile technology. It is also said that reducing the market for 2G handsets will free up radio spectrum, enabling 4G services to be rolled out more widely across Indonesia. However, details of the proposed tax have yet to be announced by the Government.

Second generation mobile networks were launched in 1991, initially in Finland before becoming commonplace all over the world in the 1990s. 2G networks allow users with 2G-enabled handsets to send text and picture messages, while voice calls are digitally encrypted, whereas first generation voice calls were made over analogue systems. 2G networks are also much more efficient and reliable than first generation systems, enabling the use of mobile telephones to spread to all parts of the world. Third generation, or 3G, networks allow users to browse the Internet, among other more advanced features. Fourth generation technology is an evolution of 3G, providing much faster internet connections.

However, making the switchover happen will probably not be a quick process for the Indonesian Government. There were a total of 323m mobile connections in Indonesia in the first quarter of 2015, according to GSMA Intelligence, which provides data and analysis on the global mobile telecommunications industry. Of these, just 1.34m use 4G connections with the remainder using 3G (113m) and 2G (209m).

TAGS: tax | internet | Indonesia | telecoms | services | Communications

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