Tax system for Indonesian e-commerce


Indonesian Tax Law

Tax on Taxable Income to Small Business Owner

In Indonesia as taxes on the taxable income to UMKM small business owners (Usaha Mikro, Kecil, dan Menengah) with annual sales of 4.8 Miliyar or less, it is not such income tax (PPh 25 bulanan) , but it takes 1% for the external standard tax (Pro forma perpajakan standar) like a business tax that tax to all business owners equaly, and because it is not a PKP taxable business owner (Pengusaha Kena Pajak = Taxable Entrepreneur) in terms of tax law, tax returns are also voluntary that becomes declaration (Voluntary Registration).

In cases where transactions subject to withholding tax are generated in addition to corporate income tax, for example, PPh 22 (2.5%) which is prepayment of income tax at the time of sales at the time of importation, PPh 24 (Indonesia) originated in Japan among income obtained by Indonesian residents in Japan , PPh 23 (2%) with service withholding tax etc occur, it is necessary to declare at “SPT (Surat Pemberitahuan) Masa bulanan”.

However, since e-filing system and e-billing system were launched, SPT Masa provided by DJP (Direktorat Jenderal Pajak Indonesian National Tax Administration) that supports these payments can be declared on line now, we will send it to KPP (Kantor Pelayanan Pajak Tax Office) , to there is no need to go.

Tax system for e-commerce owner

The above applies not only to individual business owners but also individuals who are doing e-commerce in side business while working in a company, but in 2013 Surat Edaran Direktur Jenderal Pajak Nomor SE / 62, a tax system on e-commerce / PJ / 2013 classifies the e-commerce business into the following four and defines the scope of application of PPh income tax and PPN value added tax.

  1. Online Marketplace
    PPh23(Service withholding tax), PPh21(Personal income tax), PPh26(Withholding tax 20% overseas service purchase)
  2. Classified Ads(Digital Advertising)
    PPh23(Service withholding tax), PPh21(Personal income tax), PPh26(Withholding tax 20% overseas service purchase)
  3. Daily Deals(Auction site)
    PPh23(Service withholding tax), PPh21(Personal income tax), PPh26(Withholding tax 20% overseas service purchase)
  4. Online Retail

In this e-commerce tax system, even though the online business of US capital such as Youtube, Facebook, Yahoo etc. raises advertisement income from Indonesia domestically, in order to make payment to an American corporation through an American server, in Indonesia they does not pay 20% of PPh 26 (withholding on the Indonesian side at the time of payment to overseas service), but as long as the company raises sales in Indonesia is BUTU permanent corporation (Bentuk Usaha Tetap) , they will be obligated to pay tax as a PKP taxable business owner.

Whether to run e-commerce business as a private business or as a corporation

After all, from the viewpoint of taxation, there is no difference whether it is a private business or a corporation in terms of tax system, there is an obligation to pay PPh 25 corporate income tax or external standard taxation, and various income taxes.

Rather, there is a merit of risk hedging that investment can be accepted by making it into a corporation (PT = Perseroan Terbatas), and responsibility for loss becomes a limited liability by becoming a corporation and it does not cover individual assets.

Nevertheless e-commerce individual business owner hesitates to incorporate, the reason why they would not pay taxes now, so they do not want to pay in the future.

But the eyes of the tax office are hard to reach by using individual bank accounts in business transactions, the tax office has the right to view the account information associated with NPWP (taxpayer number).