Indonesia: Conventional Regulation Hampers E-commerce Tax Collection

• Aug 30, 2017

TEMPO.CO, Jakarta – Conventional business regulations are hampering the collection of e-commerce taxes by the Directorate General of Tax.

The prevailing tax regulations require the physical presence of taxpayers in tax reporting. “In the digital era, the physical presence is no longer important. People can work and make money anywhere,” Tax DG official Ahmad Sadiq Urwah said yesterday in Jakarta. “The prevailing rules are not yet suitable with the current phenomenon.”

Aside from obsolete regulations, the Tax DG is also having difficulty in coordinating with other government agencies over taxes, Sadiq said. “It cannot be done by the Tax DG only. Cooperation with other institutions that oversee e-commerce is needed. A synergy is needed,” he said.

Yustinus Prastowo, the Executive Director of the Center for Indonesia Taxation Analysis, agrees with Sadiq. He said that the government has not been responded well to the shift from conventional to digital business. “Despite the fact that, in the last two years, e-commerce has grown rapidly,” he said.

The government’s sluggish approach to responding to the trend is evident in the protracted preparation of an e-commerce regulation. “The Communication and Informatics Ministry had long planned to issue a regulation. But the Ministry has only issued a draft regulation. It ought to be concluded soon,” he said.

Yustinus has called on the government to change its paradigm. He said that it should become more than a regulator. “The government should also become the facilitator and accelerator. It needed not only regulations but also dynamic human resources,” he said.

Source: https://en.tempo.co/read/news/2017/08/30/056904498/Conventional-Regulation-Hampers-E-commerce-Tax-Collection