Indonesia set to tighten noose on online merchants evading tax
Online shops have boomed in Indonesia with vendors offering goods from refrigerators to condoms to the latest iPhone, often without declaring incomes.
Indonesia plans to require online merchants to own tax identification numbers starting this year, part of efforts to boost revenue and improve compliance in the fast-growing e-commerce industry.
PT Tokopedia and PT Bukalapak.com will be among e-commerce companies which will ask sellers for identification numbers, known as NPWP, as a condition to operate on their platforms, according to Robert Pakpahan, the Finance Ministry’s director general of taxes. These platforms will submit a monthly report of transactions to the government, he said.
“We want to improve tax enforcement but we don’t want to scare the startups,” Pakpahan said in an interview in Jakarta. “Instead of the startups collecting taxes, their merchants will perform self-assessment on the arrears.”
President Joko Widodo is accelerating efforts to boost revenue to help finance billions of dollars in infrastructure projects as the economy struggles amid an emerging-market rout. Online shops have boomed in Indonesia with vendors offering goods from refrigerators to condoms to the latest iPhone, often without declaring incomes.
Online commerce sales in Indonesia will grow to as much as $65 billion in 2022 from $8 billion in 2017, McKinsey & Co. estimated. Bukalapak reported a 60 percent annual growth of its sellers in June and is signing up hundreds more mom-and-pop stores daily.
Starting in July, the government lowered the final income tax for micro, small and medium enterprises to 0.5 percent from 1 percent, and gave a transition period of as long as seven years before imposing normal rates.