JAKARTA (TheInsiderStories) – Indonesian government withdraw tax treaty rules for e-commerce through PMK Number 31/PMK.010/2019, said finance ministry on Tuesday (04/16). The new regulation is the legal basis for the government to revoke the prior regulation PMK Number 210/PMK.010/2018 concerning Tax Treatment of Trade Transactions of e-Commerce.

“That in order to adjust to the development of the situation, it is necessary to withdraw PMK 210/ MK.010/2018,” wrote the ministry in a written statement in Jakarta, on Monday (04/15).

Minister of Finance Sri Mulyani Indrawati previously mentioned that the revocation was also motivated by the need to coordinate and synchronize more comprehensively between ministries and institutions.

Coordination is carried out to ensure that e-commerce arrangements are right on target, fair, efficient, and encourage the growth of the digital economy ecosystem by listening to input from all stakeholders.

According to Indrawati, many parties thought this regulation resulted in a new form of tax, even though it only clarified the business of registering e-commerce traders. Therefore, she thinks that there is still a need for deeper socialization. Moreover, there are entries from e-commerce associations who want tax rules for online traders via social media.

“So much confusion. So, I decided to withdraw PMK 210/2018. Thus the confusing April 1 tax on e-commerce is not true, we decided to withdraw the regulation,” she revealed.

This withdrawal also gives time for the Government to conduct more intensive socialization and communication with all stakeholders, as well as prepare e-commerce data reporting infrastructure.

With the withdrawal of the regulation, Indrawati reminded that the tax treatment for all economic actors still refers to the provisions of the applicable legislation. Business players both e-commerce and conventional who receive income up to Rp4.8 billion (US$342,857.14) can use the final tax scheme at a rate of 0.5 percent of the total turnover of the business.

As is known the e-commerce tax rules issued at the end of last year and should take effect from April 1, 2019, were suddenly canceled by the government because it had triggered a misunderstanding on various parties.

Chairperson of the Indonesian E-commerce Association Ignatius Untung said that the revocation of the tax rules on digital commerce was right. The reason is, without clear provisions, there is a concern that e-commerce players will move to social media such as Facebook and Instagram, which have so far not been regulated in tax regulations.

Therefore, said Untung, the withdrawal of this regulation must be followed up by a number of other steps, if the regulation is to be issued later. One of them is building digital-based systems and infrastructure that can be connected directly to the marketplace platform.

Thus, each trade transaction can be recorded and collected without burdening the provider of the marketplace platform. “Right now, right, we [the marketplace] are asked to collect the transaction data,” he said.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com