Indonesia to make e-commerce firms collect tax on sellers' sales
E-commerce platforms argue that the regulation could raise administrative costs and drive sellers away from online marketplaces. (Reuters pic)
JAKARTA : Indonesia plans to implement new regulations requiring e-commerce platforms to withhold tax on their sellers' sales income in a bid to boost revenues, according to two industry sources informed of the move and a document seen by Reuters.
The planned directive, which also aims to level the playing field with brick-and-mortar shops, could be announced as soon as next month, one of the sources said, as Southeast Asia's largest economy grapples with weak revenue collection.
The changes would affect the country's main e-commerce operators, including ByteDance's TikTok Shop and Tokopedia, Sea Limited's Shopee, Alibaba-backed Lazada, Blibli and Bukalapak, one of the sources said.
E-commerce platforms are opposing the regulation, arguing it could increase administrative costs and push sellers away from online marketplaces, said the sources, who were briefed on the plan by tax authorities.
Indonesia introduced a similar regulation in late 2018, requiring all marketplace operators to share sellers' data and make them pay taxes on sales income, but withdrew it three months later due to a backlash from the industry.
The sources asked not to be named as they were not authorised to speak publicly about the matter.
Indonesia's finance ministry, which will be responsible for issuing the order, declined to comment.
Indonesia's e-commerce industry association idEA would not confirm or deny details of the plan. However, it said the policy will affect millions of sellers if implemented.
Finance ministry data showed revenues fell 11.4% year on year in the January to May period to US$61 billion due to low commodity prices, weak economic growth and disruptions to tax collection caused by a system upgrade.
Indonesia's e-commerce industry, meanwhile is booming, with last year's estimated gross merchandise value of US$65 billion expected to grow to US$150 billion by 2030, according to a report by Google, Singapore state investor Temasek and consultancy Bain & Co.
The sources said that under the new rule e-commerce platforms will be required to withhold and pass onto the authorities tax amounting to 0.5% of sales income from sellers with annual turnover of between 500 million rupiah and 4.8 billion rupiah.
Those sellers are considered small and medium-sized enterprises and are already required to pay that tax directly.
One of the sources added that there was also a penalty proposed for late reporting by e-commerce platforms.
The sources' comments were corroborated by the contents of an official presentation the tax office made to operators that was seen by Reuters.
In addition to the expected additional administration costs, e-commerce platforms are expressing concern the current tax system, which has been facing technical problems after an upgrade at the start of the year, will struggle to handle the amount of data the tax office is asking marketplaces to share.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Free Malaysia Today
39 minutes ago
- Free Malaysia Today
Govt open to factual criticism of tax system, says Anwar
The expanded sales and service tax will take effect on July 1. PUTRAJAYA : The government upholds transparency and is ready to accept any criticism of the taxation system, provided that it is based on facts, Prime Minister Anwar Ibrahim said today. Anwar, who is also the finance minister, said criticism should be conveyed through the proper channels and not in the form of slander or verbal abuse. 'I noticed some university students complaining about electricity bill adjustments – I don't understand. 'Electricity rates have not gone up, so is it true that they are affected? If it's true, then we need to fix it because public universities are exempted,' he said in his speech at an assembly with staff from the Prime Minister's Department. 'Such matters, when spread in the name of freedom, can become avenues for slander and verbal abuse. So I hope, brothers, sisters, younger friends or children, please provide facts. I have no issue with people complaining or offering criticism,' he said. Anwar also said that the adjustment of electricity tariffs and the expansion of the sales and service tax (SST) were to ensure that those with greater financial means contribute a fairer share, while protecting segments of the population from undue financial pressure. 'If possible, we don't want to burden the people with taxes. If there are one or two cases where people are affected, we can make improvements. However, to outright oppose the electricity (tariff) adjustment – I think that's not right,' he said. On June 9, the government announced a targeted review of the sales tax rate and the expansion of the service tax, to take effect on July 1. On June 13 meanwhile, the Energy Commission announced that more than 23.6 million domestic users in Peninsular Malaysia would benefit from a fairer and more progressive electricity tariff structure, effective July 1, 2025 to Dec 31, 2027.
Free Malaysia Today
42 minutes ago
- Free Malaysia Today
SST expansion to have limited impact on inflation, says investment bank
RHB IB said the exclusion of critical sectors like public transport from the SST's expansion will help minimise any potential drag on the country's economic growth. PETALING JAYA : RHB Investment Bank Bhd (RHB IB) says it expects the expanded sales and service tax (SST), which comes into effect on July 1, to have a limited impact on inflation due to exemptions for essential sectors. In a research note, it said exemptions given in key sectors, such as food, healthcare and basic utilities, will prevent the expanded SST from financially burdening Malaysians. RHB IB explained that the SST expansion primarily targets discretionary or non-essential items, such as luxury goods, entertainment and certain lifestyle services. The research firm also expects the expanded SST to have a negligible impact – estimated at around 0.1% or 0.2% annually – on the consumer price index (CPI). 'By excluding critical sectors like food, healthcare, utilities and public transport, the expansion avoids placing undue burden on the broader economy, thereby minimising any potential drag on growth,' it said. RHB IB also said that the additional revenue from the SST's expansion – up to RM10 billion annually –not only strengthens government finances but also provides greater fiscal space to manage public expenditure and reduce the nation's budget deficit. Under the SST expansion, zero tax rates will remain for essential goods while a rate of 5% to 10% will be imposed on non-essential items from July 1. The scope of the service tax will be expanded to cover rental, leasing, construction, financial services, as well as private healthcare and education services. Services directly impacting Malaysians, such as public healthcare and selected medical services, will continue to be exempted from the service tax. Meanwhile, MIDF Research assured that demand for real estate remains strong, and the impact of the SST's expansion is expected to be minimal as residential buildings remain tax exempt. 'As for commercial and industrial buildings, we expect the SST's impact to be limited as demand for industrial assets remains strong,' it said in a research note. The firm also projected that new property sales would increase in the second half of 2025 in line with more active project launches and a significant rise in housing loan applications. It noted that loan applications rose 6.1% year-on-year to RM56.2 billion in April, after recording a 4.8% growth in March. Meanwhile, CIMB Securities said the SST's expansion is expected to have limited direct impact on the automotive sector. In a research note, it said vehicle sales are already subject to a 10% sales tax, while maintenance and repair services are currently subject to an 8% service tax. 'That said, there may be a slight increase in dealership and showroom rental costs, but we believe the impact will be minimal,' it said.
Malay Mail
an hour ago
- Malay Mail
Petronas identifies pipeline segments for review after Putra Heights gas explosion
KUALA LUMPUR, July 1 — Petronas has found more parts of its extensive underground gas pipeline system that could be vulnerable to the same issues which led to a powerful explosion in Putra Heights in April, authorities confirmed. Malaysia's Department of Occupational Safety and Health (DOSH) said yesterday, as reported by The Star, that the national oil and gas company had identified other pipeline segments with conditions resembling those at the Putra Heights site, prompting safety directives. 'We have given the directive following Petronas identifying the locations similar to the Putra Heights location,' said Husdin Che Amat, director of DOSH's Petroleum Safety Division, during a press conference at the Selangor state secretariat. While the exact locations were not disclosed, Husdin said the potentially affected areas are part of the 2,680km-long pipeline system that stretches from Kerteh to Segamat and to the borders with Singapore and Thailand, including a segment from Pengerang to Segamat. According to The Star, Husdin said discussions are under way with Petronas to determine both immediate and longer-term steps to address the issue and ensure public safety. The move comes in the wake of the April 1 blast in Putra Heights, Subang Jaya in Selangor where an underground gas leak triggered an explosion that damaged homes and injured residents. Yesterday, Selangor Menteri Besar Datuk Seri Amirudin Shari revealed at the same press conference that the explosion was caused by soil subsidence that happened over the years since it was laid in 2000, resulting in the pipe shifting by 15.9cm. 'The impact from the subsidence caused the pipe to move by 15.9cm and this was found after analysing samples from the pipe that showed signs of fatigue and stress lines on the structure,' he said. The report was prepared by the investigation team comprising several agencies and led by DOSH.
