Prof. Sunaryati Hartono once said: Indonesia must run the law if it wants to advance.
Indonesia ’s Finance Minister Sri Mulyani recently emphasized that Indonesia ’s economic growth does not come from debt, but from investment by foreign private companies. Relying on investment, she is confident that Indonesia’s economic growth rate can reach 7%. In order to attract more foreign investment, the government should formulate facilitation measures in the financial field. One of them is to deregulate investment and promulgate Omnibus Law, such as the implementation of tax reduction and incentive policies, to attract large amounts of foreign investment. So despite the regulation of e-commerce taxation, its purpose is to attract foreign investment and promote economic development.
Among them, Article 14 of the Comprehensive Tax Law clearly stipulates that resolute action will be taken on all traders who participate in commercial activities in the form of e-commerce. In this case, the Ministry of Finance plans to impose income tax and value-added tax on e-commerce operators.
As mentioned in Article 14, paragraph 1, income tax will be levied on the income of tax bodies that conduct e-commerce activities in Indonesia.
The income tax levied on Indonesian e-commerce traders will follow the provisions mentioned in the Income Tax Law. The value-added tax levied on Indonesian domestic e-commerce traders will follow the provisions of the VAT Law on Goods and Services and the Luxury Sales Tax.
According to the “SEA e-Conomy 2019 Report”, Indonesia is expected to achieve a target of $ 82 billion in e-commerce transactions by 2025. On the other hand, Indonesia’s closest competitor is Vietnam. By 2025, Vietnam’s transaction volume is only 23 billion US dollars. From this fact, the efforts of the Indonesian government to pursue e-commerce taxes are largely meaningful because of the huge tax potential. This potential digital tax can also help the government achieve tax goals.
At the same time, this measure can further regulate the Indonesian e-commerce market, thereby better attracting foreign investment.