Indonesia govt tightens rules on e-commerce players

The Indonesian government has regulated all e-commerce sellers to share data with the authorities, as well as to paying income tax and value-added tax (VAT), said an article on Reuters.

According to an article on Deal Street Asia, moving forwards operators of online marketplaces will have to note down the seller’s turnover and report the figures to authorities. The rules will extend to players such as Lazada and Tokopedia, which Alibaba currently backs. Bukalapak, is backed by Ant Financial under Alibaba, will also face similar consequences.

Last year a McKinsey report highlighted that Indonesians are among the world’s most avid users of social media, in a country with a rapidly growing digital ecosystem of online commerce, ride-sharing services, media distribution, financial services, and more. While these factors have created significant business opportunities and new jobs, improved access to services, and promoted greater connectivity with global society, Indonesia must still overcome several challenges to become a truly digital economy.

It added that the  online commerce (defined as consumers buying and selling physical goods online) in Indonesia is now an US$8 billion-a-year sector that affects local manufacturing directly. The study forecast indicates that online-commerce sales will grow eight fold, with formal e-commerce reaching US$40 billion and social commerce up to US$25 billion by 2022. 30%  of this activity will involve new consumption that would not have occurred otherwise, and the market will support up to 26 million full-time-equivalent jobs in 2022.

Meanwhile, an e-commerce seller is also required to pay income tax of 0.5% of turnover for SMEs, or a 25% corporate tax of profit for big enterprises, said numerous media reports. The tax department also said that there were previously no taxes applied but the government aims to create an "equal treatment" with conventional businesses.