Indonesia retracts e-commerce regulation to avoid confusion

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JAKARTA (March 29): Indonesia retracted its new rules requiring e-commerce sellers to share data with tax authorities to avoid further confusion, the country's finance minister said on Friday.

"We are pulling it back because there is too much noise, while there is not even a new tax," Finance Minister Sri Mulyani Indrawati told reporters.

The rules initially stated that all operators of online marketplaces, including Tokopedia and Bukalapak, will have to detail each seller's turnover and share data with authorities.

There were no new taxes being applied, but the rules were put in place to clarify what taxes each player in a marketplace is obliged to pay and to "create an equal treatment with conventional businesses," the tax department has said when the rules was announced in January.

Surging smartphone use and a rising middle-class income in Indonesia, home to 260 million people, have made the e-commerce industry a battleground for foreign investors.

Sellers at online marketplaces are still required to pay the same taxes as conventional ones, for example, the 0.5% income tax for small- or medium-sized business or a 25% corporate tax of profit in case of large enterprises.

The department had previously also stated that an online seller that makes at least 4.8 billion rupiah (US$339,943) in turnover must charge value added tax to customers and pay this to the authorities.