Indonesia e-commerce tax is effective from April 1st, or it should have been, if the government didn’t change their mind and retract the law.
If the e-commerce law proceeded as planned, these were how the online business players would be affected:
- Sellers on e-commerce platforms would have to pay 10 percent VAT (value added tax) and luxury goods sales tax.
- SMEs (Small and Medium Enterprises) on e-commerce platforms with less than 4.8 billion rupiah (SG $461,000) annual online sales would be subjected to 0.5 percent income tax, just like offline retail does.
- E-commerce platforms would have to have tax numbers. These online marketplace would also need to manage and report the tax obligations of the sellers on their platforms.
The law may be retracted now, but assuming the e-commerce industry in Indonesia will never be regulated is naive.
E-commerce is the hottest vertical in Indonesia tech sector. According to Google and Temasek, the expected value of Indonesia e-commerce market in 2025 will take 8 percent of total retail market or around US $46 billion.
Indonesia e-commerce market potential has attracted investments from Chinese tech giants Alibaba and Tencent and 14 trillion rupiah (SG $1.3 billion) investments from Amazon. President Joko Widodo has also launched a program to ensure the country’s 59 million SMEs – which contribute more than half of the country’s GDP – have online presence.
Considering the large middle-class population in Indonesia, increasing internet penetration, and strong but neglected-by-traditional-retailers buying power in cities outside Java, your business is missing out on huge potential revenues if you haven’t entered Indonesia e-commerce market yet.
The bureaucracy, ambiguous and reactive regulation, and other challenges in Indonesia may discourage you from launching your flagship store on Indonesia e-commerce platform, but you can leave the hard work to trusted e-commerce enabler with strong local and cross-border presence. With experienced local and international team, e-commerce enabler will manage your brand’s flagship store on any e-commerce platform of your choice, analyze and report business insights to you, and ensure you have strong online brand presence and sales performance.
Click here to contact SCI eCommerce now.
SCI eCommerce is an experienced high end e-commerce enabler and e-distributor company, with Singapore-based HQ and offices in Southeast Asia.
Adopting high-performance marketing concept and best management practices, SCI has helped brands including Unilever, Abbott, Midea, Oppo, Nestle, Vinda, and Danone successfully penetrate through Southeast Asia and CBEC e-commerce market.
Discover more about SCI eCommerce and their services here.