E-commerce group calls on government to postpone new tax regulation

E-COMMERCE - JAKARTA. The Indonesian e-Commerce Association (idEA) has called on the government to postpone the implementation of a new tax regulation for e-commerce companies, fearing that unprepared taxpayers and unequal treatment could deter growth.

idEA chairman Ignatius Untung said that while Finance Ministry Regulation No: 210/2018 did not impose any new taxes, it required online sellers to register their tax numbers (NPWP) and personal Identity cards (IDs).

The regulation was announced earlier this month and is to take effect on April 1.

Under the regulation, online sellers with annual revenues below Rp 4.8 billion (US$339,835) are required to pay a 0.5 percent tax for small and medium enterprises (SMEs), whereas sellers making above Rp 4.8 billion per year must pay taxes according to the appropriate tax rate.

“Many sellers on online marketplaces  are micro businesses that are still testing the waters,” Untung told reporters at a press conference on Monday.

Furthermore, the association said the rule targeted online sellers that only operated on e-commerce platforms, whereas an idEA study found that only 19 percent of online sellers operated exclusively on e-commerce platforms and that 85 percent of sellers used either social media or both e-commerce platforms and social media.

Untung emphasized that the request to postpone the regulation did not mean that idEA was encouraging online sellers to evade tax, and that it had made the request because the government had not elaborated on how much the regulation would contribute to the economy.

“We would rather have the government improve the overall taxation system and conduct a general study with us to determine the economic benefits of the regulation before implementing it,” he said.