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Indonesia plans to tax online retailers

Publication Date : 18-03-2014


Shopping online can be fun and allows one to avoid long queues — and sales tax.

But that perk is likely to change, as the Indonesian government is proceeding with a plan formulated in July last year to begin collecting tax on sales conducted over the Internet.

“With the new Trade Law, we have a strong base to oblige all online sellers to pay tax on each transaction they make,” Trade Ministry Secretary General Gunaryo said recently, adding the government would discuss the details of the matter further before issuing a regulation.

He said the government would soon require all online retailers, selling through websites or social media platforms, to provide personal and business details for tax and dispute settlement purposes.

He said many online retailers — unlike their brick-and-mortar rivals — were reaping the benefits of the thriving Indonesian online market without paying sales or income tax.

Indonesian Employers Association (Apindo) deputy secretary-general Franky Sibarani quoted Tax Directorate General data, saying that some 60 per cent of the total online retailers operating in the country did not pay tax, meaning trillions of rupiah worth of online transactions per year were going untaxed.

Lani Rahayu, marketing communication manager for PT Global Digital Prima, which runs online store, said her company was already in line with the government’s plan as it included value-added tax (VAT) in any transactions it made.

While Franky said the government had been discussing the possibility of collecting tax from foreign online retailers as well, Indonesian E-Commerce Association (idEA) chairman Daniel Tumiwa expressed his objection.

“If the government obliges foreign online retailers to pay tax to this country, then our online retailers will be treated the same overseas,” he said.

Daniel also said that small-sized online retailers should not be subject to tax, as was the case with the many small brick-and-mortar businesses.

“The government should not only focus on how to tax, but also how to keep our online market growth well and secure,” he said.

According to the Association of Indonesian Internet Providers (APJII), the number of Internet users in the country will double from the current 80 million to about 160 million people in the next three years.

Meanwhile, Indonesian e-commerce transactions are expected to see an annual growth of 40.2 per cent to 650 million dollars from 2010 to 2015, according to an estimates by consulting firm Frost and Sullivan.

According to another survey released last year by Southeast Asian research firm MarkPlus Insight, one out of every five Indonesians shopped online last year, an increase from 15 per cent in the previous year.

Of the total online buyers, 27 per cent shopped via Blackberry Messenger (BBM), 26 per cent on Facebook, 20 per cent on online stores like Lazada and Zalora and the remainder on online forums or brokers, like Tokobagus.


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