Indonesia working on new e-commerce tax rule in bid to target 'shadow economy'
A signage of Shopee, the e-commerce arm of Southeast Asia's Sea Ltd, is pictured at their office in Singapore, March 5, 2021. REUTERS/Edgar Su/File Photo
JAKARTA (Reuters) -Indonesia is working on a new regulation that will require e-commerce platforms to collect and pass on sellers' sales income in a bid to tackle the "shadow economy", its tax office said on Thursday, confirming a Reuters report earlier this week.
Citing sources, Reuters reported exclusively on Tuesday about a planned directive that e-commerce platforms must withhold and pass onto the authorities a levy amounting to 0.5% of sales income from small and medium-sized sellers.
Sources said the rule could be introduced as early as next month, though a statement from the tax office did not give any schedule amid concerns from some platforms that they would need time to implement such a directive.
"The rule is still in the works and will be announced and explained to the public after," the statement said, adding that e-commerce platforms and other stakeholders have been consulted and have so far given their backing.
Indonesia's e-commerce association idEA said on Wednesday that it will comply with any government policy, but expressed concern overimplementation timelines, stressing that it needed to be handled carefully as it will impact millions of sellers.
The changes would affect the country's main e-commerce operators, including ByteDance's TikTok Shop and Tokopedia GOTO.JK, Sea Limited's SE.N Shopee, Alibaba-backed 9988.HK Lazada, Blibli and Bukalapak BUKA.JK, one of the sources said.
Sources also told Reuters there could be penalties for late reporting.
ByteDance's TikTok, which runs Tokopedia, one of Indonesia's biggest e-commerce platforms, told Reuters in a statement that it would need time to implement the directives.
Tokopedia has around 12 million sellers listed on its platform, and, in 2023, the total value of transactions reached 249 trillion rupiah ($15.3 billion), according to a company presentation.
"We hope its implementation takes into account the need for adequate preparation time for various aspects. This includes the technical readiness of platforms and the capacity of sellers, especially small and medium-sized enterprises, to comply," TikTok said in the statement.
The tax office said the regulation was intended to improve supervision of the "shadow economy" and vendors who do not pay taxes because of the perceived complexity of the filing process.
Indonesia's has a booming e-commerce industry, with last year's estimated gross merchandise value of $65 billion expected to grow to $150 billion by 2030, according to a report by Google, Singapore state investor Temasek and consultancy Bain & Co.
(Reporting by Stefanno Sulaiman; Writing by Gibran Peshimam; Editing by David Stanway)
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