JAKARTA (TheInsiderStories) – The new e-commerce tax policy released by Indonesia’ Finance ministry (MoF) get a criticized from Indonesian e-Commerce Association (idEA). In their stances, the association asked the government to postpone the new rule.

Last week, the ministry has issued Minister of Finance regulation Number 120 Year 2018 concerning on Tax Treatment of Trade Transactions through the Electronic System. The regulations stated that the e-commerce players should collect the tax number and identity card (ID) of the merchants then submitted to the Directorate General of Tax.

Hoped, the policy will be set up on April 1, 2019. But so far it has received a response from e-commerce players. In the new policy, merchants and e-commerce vendors who sell goods will be subject of the value added tax of 10 percent. In addition, the ministry also requires traders to have a Tax identity card (ID) number and provide tax number to e-commerce managers.

According to the Chairman Ignatius Untung at a press conference in Jakarta, on Monday (01/14), that the regulation issued without studies, public testing, and comprehensive socialization of Micro, Small and Medium Enterprises (MSMEs) actors.

He also stated that the government seems to make unilateral regulations without considering the voices of marketplace actors regarding the availability of infrastructure and systems to validate the tax ID number.

Furthermore, the application of these regulations can hamper the growth of MSMEs. So the association along with industry players invites stakeholders to find a middle ground in the implementation process.

Untung said, the regulation was issued without socialization, so feared deadly potential of e-commerce as a driver of Indonesia’s economic growth. He explained, the marketplace platform has now been considered as an opening opportunity for MSMEs players.

As reason, the risks offered by e-commerce are relatively minimal because there is no need to rent shops, employees, and can minimize the costs.

“The enthusiasm of the people to buy from online platforms is also increasing rapidly,” said Untung.

Referring to the McKinsey study in 2018 said that in the next 2022 online trading will create 26 million jobs both directly and indirectly.

“So idEA sees, the enactment of regulation can be seen as an entry barrier. This in no way facilitates their struggle to survive and develop their businesses to burden them,” he noted.

Meanwhile, based on study and facts showed that there are still many micro entrepreneurs who are still at the trial level. Based on these considerations, idEA asked the MoF to postpone and review the implementation of regulation, while jointly conducting a study to find the right formula.

Moreover, according to him, the issuance of this regulation has minimal study, public testing, and socialization to the agreement on the availability of infrastructure as well as a system for validating tax number as referred to the formula.

The idEA study in 2017 involving 1,765 SMEs in 18 cities in Indonesia, showed that as many as 80 percent of SMEs were in the micro category. Then 15 percent of them are in the small category, only five percent can be said to be entered into medium-sized businesses.

“This means that it is probable that 80 percent of SMEs are still struggling to survive. Including testing their business, before they can grow their business,” he explained.

The government does not stipulate new types or tariffs for e-commerce tax players there. However, it solely related to taxation procedures and procedures to facilitate administration and encourage tax compliance of e-commerce actors to be equal to conventional business actors.

Written by Daniel Deha, Email: theinsiderstories@gmail.com