Indonesia Halts Implementation of E-Commerce Tax

April 2019

Sri Mulyani Indrawati, Indonesia’s finance minister, has announced that Indonesia is halting the implementation of PMK 210/2018, a regulation which governs the taxation of eCommerce. It was first announced in January this year and was supposed to be implemented on 1 April 2019.

The retraction was carried out to ensure better coordination between relevant government institutions and industry players, such as online marketplaces and e-commerce platforms. Also, the government would need more time to prepare for eCommerce data reporting Infrastructure.

PMK210/2018 was initially drafted for all sellers and merchants on online platforms to be tax compliant and provide a taxpayer number (NPWP). The marketplace platforms would have then become a tax deposit agent, with the responsibility to collect, record and deposit tax data for the Directorate General of Taxes of Indonesia. Sellers with profits below USD 337,000 per year would be subject to a flat 0.5% tax rate, while those with higher revenues would be categorized as taxable entrepreneurs (PKP) and follow value-added tax (VAT) rules.

It would contribute substantial tax revenues for the government as McKinsey estimated there were 4.5 million active sellers on e-commerce platforms in 2017. Of the 4.5 million sellers, 99% were micro-enterprises and 50% were online business with no physical store presence.  

(Sources: Marketing Interactive; Kr Asia; The Jakarta Post)

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