The regulation requires online marketplaces operating in the country to withhold and remit a 0.5% income tax on sellers earning more than 500 million rupiah annually. — The Jakarta Post
JAKARTA: Indonesia’s Finance Ministry issues a new regulation requiring eCommerce players to collect income tax from sellers on their platforms, as the government seeks to boost tax compliance among online merchants.
The rule was outlined in a Finance Ministry regulation that took effect on July 14. The regulation requires online marketplaces operating in the country to withhold and remit a 0.5% income tax on sellers earning more than 500 million rupiah annually.
Online marketplaces that will be subject to the new rule include TikTok Shop and Tokopedia, both owned by Chinese digital giant ByteDance, Shopee of Singapore’s Sea Ltd, Lazada of China’s Alibaba Group and Blibli of Djarum subsidiary Global Digital Niaga.
It only exempts certain sellers, such as courier services, phone credit vendors and jewellery merchants.
Online merchants are required to report their sales invoice information to the eCommerce platform, which will then forward it to the Tax Directorate General.
Although the rule came into effect immediately, platforms have been given one month to comply.
Tax Directorate General spokesperson Rosmauli said the regulation was introduced amid a surge in online marketplace transactions in Indonesia, especially after the Covid-19 pandemic, which accelerated the shift in consumer behaviour towards digital platforms.
She added that the growth was also driven by the country’s large population, rising smartphone and Internet usage and advancements in financial technology that have made online transactions more accessible.
“Therefore, regulation that simplifies tax administration is necessary, particularly for businesses transacting via electronic systems,” Rosmauli said on Monday, as quoted by Antara.
The regulation also aims to create a “level playing field” between digital and conventional businesses – similar measures have been implemented in Mexico, India, the Philippines and Turkiye, she said. — The Jakarta Post/ANN
