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Indonesia’s gamble with e-commerce tax

Indonesia’s gamble with e-commerce tax


Indonesia’s small- and medium-sized enterprises (SMEs) and e-commerce platforms are up in arms over a plan to levy taxes on online businesses, as authorities in Southeast Asia’s biggest economy grapple with tax collection from its burgeoning digital sector.

The Indonesian tax authority is set to introduce the e-commerce tax scheme in April, getting the ball rolling by tabulating taxpayer identification numbers from SMEs that sell products and services on online marketplaces. The task of logging these ID numbers will be assumed by e-commerce platforms operating in the country, which include a pair of Alibaba-backed firms, Bukalapak and Tokopedia. Alibaba owns the South China Morning Post.

According to a December 31 regulation from the finance ministry, sellers in online marketplaces are subject to a 10 per cent value added tax (VAT) as well as a sales tax on luxury goods that can go up to 200 per cent for certain items.