eCommerce Player Rejects Free Tax Policy

Daniel Tumiwa (dok)

JAKARTA (IndoTelko) - Indonesian eCommerce Association (idEA) has urged the government to cancel its free tax policy to online businesses as it can shutdown the eCommerce industry.

"Indonesia eCommerce Association demanded that the imposition of this free tax to be canceled," said idEA Chairman Daniel Tumiwa, yesterday.

Daniel reminded if the free tax plan continues then it will kill the creativity of the new players, which is actually required to impose a charge fee to all forms of service since the first day of operation.

"Other countries that have developed eCommerce earlier are still cautious in enacting the tax rules, to make the industry growing continuously and the provide benefits to all parties," he said.

One of the idEA Supervisory Board William Tanuwijaya said that eCommerce players actually never asked for their tax incentives.

"We hope that if there is a new tax regulation, it must not made to kill certain business models that are very dynamic in the Internet industry, providing innovation space for local players to enable them to compete in the border-less and global internet era," William said.

Willliam an also wish that in the future, Indonesia is not only become the market country but able to take a role in the digital economy potential that is targeted by the government in 2020, said William.

Regarding the tax free discourse, William emphasized on the current knowledge of Indonesian society that the Internet is something that is free, from finding information through search engines such as Google, downloading and playing games on Android, iOS, read news on various news sites, communicating in different chat platforms, to do product listing or buying and selling on social media.

"Certainly if the local players want to compete with the global players, they also must be able to offer products that are perceived to be free by the Indonesian internet users and find other business models to survive. For example, by providing a premium listing (paid ads) or a premium subscription option to users in addition to the free listing," William added.

He said that the paid option is the income of the platform. Later, as a tax-abiding company, all income tax shall be and continuously paid by the classifieds or marketplace platforms.

"If the free ads will also be taxed, then there is no room for local players to grow and compete in the borderless internet era and had to compete with global players since the first day local service launched," he said.

William also reminded that the industry players hopes for levels of playing field, it is expected that the applied tax regulation not to eliminate the business models that has been built for years with no small amount of capital.

"Currently, the industry players have been building the industry together with individual efforts and managed to absorb millions of new jobs indirectly, through the growth of the courier industry, logistics and domestic production," he said.

Eliminating Local
KASKUS founder who is also one of idEA Supervisory Board Andrew Darwis reminded on the impact of free tax policy which would kills local players in their own country.

“We believe that the tax regulation in Indonesia is undergoing a change for the better, just need to be considered in designing the tax rules that the tax was made not to complicate or shut down existing business, but should be able to support the course of a business," he said.

PriceArea founder who is also idEA Public Policy Division Board Bima Laga said that many foreign players who are still in operation for free in Indonesia, it will create the effect of injustice in the industry because of the free tax is imposed for local players only.

"There seems to be a misinterpretation of the government who equate this free service with the distribution of free product samples, which legally must be taxed. This is certainly not unreasonable considering most of the services or content accessed via the internet is indeed free. Take, for example a news portal that can be accessed for free, music videos that can be enjoyed free of charge, to support productivity applications that are free," he said.

He suggested, the Directorate General of Taxation should issue tax rules that could be applied by each eCommerce business models.

"Along with the industry development, the regulations also have to be able to adjust to the business itself. Take the example of Japan that has been more established in the eCommerce industry, where the formation of special Team for taxation of all eCommerce transactions has started in the year 2002. Nowadays it's still too early for Indonesia to adopt similar rules," he said.(es)