Indonesia: Trade Minister Agrees with Proposed 0.5 Percent E-Commerce Tax

• Feb 23, 2018

TEMPO.CO, Jakarta – Trade Minister Enggartiasto Lukita agrees with the e-commerce tax plan proposed by Industry Minister Airlangga Hartanto.

“Yes I concur,” said Enggartiasto, referring to the 0.5 percent tax rate on Thursday, February 22.

Enggartiasto argues that it would be the best move to support the small and medium-sized enterprises (SME) and industries (IKM) in the country.

“Remember that the one percent tax previously is from volume, transactions, not from profit loss. Meanwhile, if we talk about 20 percent or 30 percent tax that would be from profit and loss. That would not provide a positive climate,” said Enggartiasto.

However, he said that it is still being devised and that there has been no fixed decision but that it would be around 0.5 percent. This number is based on the fact that e-commerce sales generate roughly around Rp40 million each year, which can be considered to be an income of an IKM.

With the lower tax tariff, Airlangga hopes that there would be more national IKM products joining the already saturated online store considering that products sold on e-commerce platforms are imported products.

He added that smartphone users in Indonesia have currently reached 371 million or 141 percent of the total population. This situation can potentially drive Indonesia to become the third country with the most online business profits after China and the United States.

Source: https://en.tempo.co/read/news/2018/02/23/056915983/Trade-Minister-Agrees-with-Proposed-05-Percent-E-Commerce-Tax