E-commerce Taxation and Fiscal Policy Perspective: The Case of Indonesia

Abstract

The Indonesian government is now seriously exploring in depth the proposed tax imposition for e-commerce. In this context, this paper will discuss the following issues: the first, if Indonesian government should impose the tax on e-commerce; the second, how much the potential tax revenue from e-commerce is; and the third, how Indonesian fiscal policy perspective views e-commerce taxation. The study in this paper adopts a descriptive analytical research method. The study concludes several points. Indonesia should tax its e-commerce. The total potential tax revenue on e-commerce from VAT and income tax in 2018 ranges from almost Rp11.75 trillion to Rp16.64 trillion, with VAT dominates the contribution up to more than 90% of the total tax revenue. By not levying the tax in the year means Indonesian government will lose a partial or the most of tax revenue. The revenue loss is potentially getting bigger in the coming years if the government still fails to collect the tax. E-commerce taxation should not be strictly enforced in the beginning, yet more is emphasized on socialization and education actions. It is also intended to help the online platform to be compliant. Tax policy in e-commerce can be used for the purpose of regulating the economy, such as to control excessive online import purchasing.

Keywords: {'name': 'E-Commerce'}, {'name': 'Taxation'}, {'name': 'Fiscal Policy'}, {'name': 'Tax Revenue'}

Authors & affiliations

Sigit Setiawan
Affiliation not supplied

Deposited references

Supplied references, not a list of publications citing this article.

DOI: 10.2139/ssrn.2851356

Akcaoglu, E. (2002). International Taxation of Electronic Commerce: A Focus on the Permanent Establishment.

Bick, J. (2000). Implementing E-commerce Tax Policy. Harvard Journal of Law & Technology, Vol. 13 (3), 2000.

Cline, R. J. & Neubig, T.S. (1999). The Sky Is Not Falling: Why State and Local Revenues Were Not Significantly Impacted by the Internet in 1998.

DOI: 10.1257/aer.104.1.1

European Parliament (2012). Simplifying and Modernising VAT in the Digital Single Market. Written by Naess-Schmidt, Ali, & Arias.

DOI: 10.1257/jep.15.1.13

DOI: 10.1086/NTJ41789732

Hubbard, C. (2003). California officials consider proposals to tax online sales. State Tax Review, Vol. 64, Issue 9, pp. 3-5, March 4, 2003.

Kementerian Keuangan (2018). Media Keuangan Vol. XIII/126, Maret 2018

DOI: 10.1086/654751

Nellen, A. (2001). E-Commerce: To Tax or Not to Tax? That Is the Question … Or Is It? Computer and Technology Law Conference: Software, Networks and E-Commerce. Berkeley Center for Law & Technology and The University of Texas School of Law

Omar, A., Kwun, O., & Bhutta, M. K. (2012). The Impact of e-Commerce Tax Policy on State and Local Government Revenue.

DOI: 10.19030/iber.v1i2.3894

The Jakarta Post (2017). Unleashing the power of e-commerce for Indonesia. Written by Fajrin Rasyid. Fri, August 4, 2017

Ward, B. T., & Sipior, J. C. (2004). To Tax or Not to Tax E-commerce: A United States Perspective. Journal of Electronic Commerce Research, Vol. 5, No.3, 2004

We are Social & Hootsuite (2018). “We are Social & Hootsuite’s Digital in 2018 Report”

Woodward, G. T. (2001). Economic Analysis of Taxing Internet and Other Remote Sales. Testimony before the Committee on Finance, U.S. Senate, August 1