Online Business (E-Commerce) in Indonesia Taxation

ONLINE BUSINESS (E-COMMERCE) IN INDONESIA TAXATION
[R. Wiratama, M. Asri, & P. Tangke]
Richard Wiratama
Marselinus Asri
Paulus Tangke
Atma Jaya Makassar University
ABSTRACT
The development of new technology and diverse consumer demand has increased the
digital retail industry today. This also affects the way buyers / consumers get the goods and
services they want. Consumers turn to e-commerce and cellular to make purchases that are
usually done physically. This change in shopping style has been driven largely due to the
emergence of many market places and platforms. This change will also have effect on the
taxation of the transaction. The Government of Indonesia has no more specific rules, there is
only a Circular (Surat Edaran) that regulates the Affirmation of Tax Regulations on E-Commerce
Transactions, namely SE-62 / PJ / 2013 tax regulations e-commerce follows the income tax law
and value added tax.
This article was written to provide opinions on the taxation of e-commerce in Indonesia
from the perspective of government policy by using literature study through information
obtained through regulations, documents and supporting data. The purpose of writing this
article is to provide feedback on e-commerce taxation that occurred in Indonesia with various
types of valuations such as transactions and how e-commerce is done in order to find the gap
how to levy taxation of e-commerce activities.
Research method used is through the review literature review and the previous research
then do the analysis to give an opinion. The result of the research is the revenue authority has
an important role in realizing the full potential of ecommerce. According to SE-62 / PJ / 2013
there are four types of e-commerce.In Indonesia in the provisions of the applicable Income Tax
Law is article 23/26, provided that the payment is received by a state taxpayer who does not
have a P3B with Indonesia. Establishment of a regulatory body is required to monitor the traffic
of communication through the internet to prevent the occurrence of crime in cybercrime.
Keywords : E-Commerce, E-Commerce Transaction, Online Business, Digital Economic,

Indonesia Taxes, Taxpayers.
Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 1
Electronic copy available at: https://ssrn.com/abstract=3522835

1. INTRODUCTION
The internet has made the world limitless. The ability of the internet to reach all corners
of the world that are connected through online networks can make its users connected with
each other. Not surprisingly, the number of users jumped dramatically every year. With the
increase in internet users has driven the revolution of digital information technology systems
in the late 20th century which took place in the global economy. The digital economy is the
result of a process of change that is carried out through information and communication
technology systems.
The rise of the digital economy is related to the 4.0 industrial revolution from the 3.0
industrial revolution. The industrial revolution 4.0 deals with all machines connected through
the internet system or known to use cybersystems which focus on digitalization (Okestories,
2018). It was this shift in the industrial revolution that had resulted in a shift in conventional
economic trade into digital economic trade. This digital economy encourages the emergence
and development of internet-based business commerce (Online Business). One of the online
business activities that is growing rapidly, namely Electronic Commerce which is often
abbreviated as E-Commerce. E-Commerce is the use of computers and communication
networks to carry out business processes (buying and selling transactions).
Indonesia is the fourth most populous country in the world with a population of over
250 million, where almost all residents can access the internet easily. This makes Indonesia the
country with the largest digital economic value and the fastest growing in Southeast Asia. E-
commerce transactions in Indonesia have developed rapidly in the last three years. Now there
are around 10 million active sellers who transact through E-Commerce. Where most are micro
entrepreneurs with an income of less than Rp. 300 million every year. The Paypal survey states
that social media is the platform most widely used in E-Commerce transactions. According to
the survey the use of social media in E-Commerce transactions in Indonesia is 80%. The most
widely used social media with 92% is Facebook. The Indonesian E-Commerce Association
(IDEA) survey stated that 16 percent used marketplace platforms, such as Tokopedia,
Bukalapak, and Shopee.
E-Commerce Online Business in Indonesia will continue to grow along with the increase
in internet users in Indonesia. E-Commerce business that continues to grow will be one of the
sources of revenue / state revenue that is quite large. One source of state revenue from E-
Commerce is through taxes on the E-Commerce transaction, provided the tax realization goes
well. Rao (2000) states that the increasing number of internet users which has an impact on
the increasing turnover of electronic commerce is in fact causing several problems in the
financial sector, one of which is the sales tax on goods on the internet.
According to the Directorate General of Taxes the number of e-commerce actors is
approximately 1600 e-commerce, and only 1000 have just been identified and 600 have not
been identified by the Directorate General of Taxes. Of the 1000 e-commerce actors, only 620
have NPWP. This can be caused by the low compliance of Indonesian people as taxpayers in
paying taxes and reporting their tax returns in accordance with applicable regulations.
Rahayu (2010) defines tax compliance as a condition where taxpayers fulfill all tax
obligations and carry out their taxation rights. Tax compliance is the fulfillment of tax
obligations carried out by individuals or entities as taxpayers in the context of contributing to
the development of today which is expected to be given voluntarily in fulfillment.
Indonesia has an e-commerce road map that regulates licensing, taxation, holding, and
support for e-commerce. The e-commerce road map also regulates the protection of the
community. This is stated in Presidential Regulation (Perpres) No. 74/2017 of the National
Electronic Trading System Roadmap (e-commerce road map) 2017-2019. The implementation
of e-commerce taxation is regulated by Regulation of the Minister of Finance Number 210 /

PMK.010 / 2018 concerning Taxation Treatments on Trade transactions through the Electronic
System which take effect April 1, 2019. Targets in PMK Number 210/2018 for providers and
traders of marketplace platforms. The government does not set new tax rates or types for e-
commerce actors1. The purpose of PMK is to create equality among economic actors. The tax
object in the PMK e-commerce is a trading transaction that is related to the marketplace
platform on the service provider, the traders and their buyers. Service providers include
Lazada.co.id, Olx.co.id, Bukalapak.com, Tokopedia.com. PMK e-commerce only requires
marketplaces based in Indonesia. While large marketplaces based outside of Indonesia are not
regulated in the PMK e-commerce. This can create unequal playing fields between
marketplace platforms and social media.
PMK e-commerce does not regulate transactions between users and social media
providers including search engines. For example, related to advertising on Facebook, Google or
Youtube. The advertisement has so far escaped the tax provisions, even though the value is
very large. Trading transactions on other platforms on online retail, classifield ads, daily deals
refer to the Director General of Tax Circular Number SE-06 / PJ / 2015 concerning Withholding
and / or Collecting Income Tax on E-Commerce Transactions. E-commerce transactions on
social media are still not regulated. Income tax, PPN and PPnBM tax treatment for online
retail, classified ads, daily deals and social media in accordance with tax regulations.
The Minister of Finance through Press Release Number 12 / KLI / 2019, dated March 29,
2019 withdrew PMK Number 210 / PMK.010 / 2018. The withdrawal of PMK Number 210/2018
is due to the need for comprehensive coordination and synchronization between ministries or
institutions. This is done with the hope that the regulation of e-commerce is on target, fair,
efficient, encourages the growth of the digital economic ecosystem, optimizes public hiring to
stakeholders and disseminates the implementation and implementation of e-commerce tax
reporting. In the 18th century, Adam Smith had formulated four pillars in tax collection by the
state. The principle of tax collection according to Adam Smith is equality, certainty,
convenience of payment and efficiency. The principle of collection can be reviewed according
to the legal philosophy, the legal principle, the economic principle and the financial principle.
Knowing the potential for optimizing tax revenue that occurs in the development of e-
commerce and determining what tax regulations are appropriate for e-commerce business
activities in Indonesia today. This article reviews the phenomena related to e-commerce tax
which support state revenue.

2. LITERATURE REVIEW
2.1 Digital Economic and Online Business

The concept of a digital economic model according to Laudon et al. (2012) is a
fundamental result of changes in the information economy almost a revolution in the world of
commerce, with many new business models emerging and many old business models can no
longer be maintained. The business model for determining location, time, and income is based
in part on costs and information distribution.
The OECD (2015) portrays the digital economy as a result of the transformative
processes brought about by information and communication technology (ICT), which have
made technology cheaper, stronger, and widely standardized, improving business processes
and strengthening innovation in all sectors of the economy. The existence of a digital economy
can lead to benefits, namely information and knowledge more easily accessed by many
people. If technology is managed properly, it can drive innovation which can further increase
incomes and improve the quality of life of people.
Online business is an activity or activities carried out on the internet media to make
money. Like a business activity in real life, an online business that is run via the Internet also
has the same goal of making a profit.
Markets in the digital world are very flexible and efficient because they operate with
very little search and transaction costs, lower menu costs (menu costs, seller costs due to price
changes), price discrimination, and the ability to dynamically change prices according to
market conditions. In determining dynamic prices (dynamicpricing), the price of an item
depends on the demand characteristics of the consumer or the supply situation of the seller.
Digital markets can reduce or increase replacement costs, depending on the nature of the
product or service being sold, and can cause delays in satisfaction. Unlike physical markets,
you cannot immediately consume goods, such as buying clothes through the Web (Laudon et
al., 2012).
The digital economy as an online business also has many challenges, including some
countries where people cannot use or utilize information technology, there are privacy and
cyber security issues. According to Sandhausen (2008) forms of interaction in the business
world, namely:
1) B2B (Business to Business) is a business transaction between business people and
other business people. Can be a specific agreement that supports the smooth
business.
2) B2C (Business to Consumer) is an activity carried out by producers to consumers
directly without going through intermediaries.
3) C2C (Consumer to Consumer) is a business activity (sales) carried out by individuals
(consumers) to other individuals (consumers).
4) C2B (Consumer to Business) is a business model in which consumers (individuals)
create and shape the value of business processes.
5) B2G (Busines to Government) is a derivative of B2B, the difference is that this
process occurs between business people and government agencies.
6) G2C (Government to Consumer) is a relationship or interaction between government
and society. Consumers, in this case the community, can easily reach the government
so as to obtain convenience in daily services.
The development of the digital economy shaping online business is the influence of
information and communication technology (ICT). Many industries are adopting ICTs to
increase productivity, expand markets, and reduce operating costs in their businesses. Digital
economy has the character of relying on intangible assets, massive use of personal data and
jurisdiction. Some focus on taxation of the digital economy is the expansion of the definition of

Permanent Establishment (BUT), the attribution of the value of digital products in determining
the allocation of profits from each function between two places of the country where cross-
border transactions on digital goods or services, and the characterization of income from these
transactions. Two popular business models in the digital economic spectrum are E-commerce
and internet / online advertising. E-commerce can be interpreted as internet usage that
facilitates transactions involving the production, distribution, sale, and delivery of goods and
services in an open market.
2.2 Electronic Commerce (E-Commerce)
Electronic Commerce or known as E-Commerce is a part of E-lifestyle that allows buying
and selling transactions carried out online from any angle. The definition of E-Commerce
transactions according to the OECD (2010) is "commercial transactions occurring over open
networks, such as the internet. Both business-to-business and business-to-customer
transactions are include. E-Commerce is further explained in the Directorate General of Tax
Circular Letter SE-62 / PJ / 2013 that e-commerce is a trade in goods and/or services carried
out by businesses and consumers through the electronic system.
According to Suyanto (2003) understanding of e-commerce in terms of four
perspectives, namely:
1) Communication Perspective: Understanding e-commerce is a process of sending
goods, services, information, or payment through a computer network or other
electronic equipment.
2) Business Process Perspective: The definition of e-commerce is the application of a
technology towards automation of business transactions and workflows.
3) Service Perspective: E-Commerce is a tool that can meet the desires of companies,
management, and consumers to reduce service costs (sevice cost) when improving
the quality of goods and increasing the speed of delivery services.
4) Online Perspective: E-Commerce provides convenience to sell and buy products and
information through internet services and other online services.
According to (Hidayat, 2009), standard components that must be owned by E-commerce
include:
1) Products: The many types of products sold through the internet such as products for
health, sports, beauty, and clothing.
2) Place to sell a product (a place to sell): A place to sell means an internet. This means
that e-commerce must have hosting and a domain.
3) How to receive orders: How to order can be via email, telephone, sms, and others.
4) Method of payment: Payment can be made via check, bank draft, credit card,
internet payment, transfer, cash.
5) Shipping methods: Delivery can be done by package (expedition service), sales.
6) Customers service: Online forms, email, FAQ, telephone, chat, Whats App, etc.
According to the Director General of Tax Circular Number SE-62 / PJ / 2013 concerning
Affirmation of Taxation Provisions for E-Commerce Transactions and Circular of Director
General of Tax Number Se-06 / PJ / 2015 concerning Withholding and/or Collecting Income
Taxes on E-Commerce Transactions divided into four, namely:
1) Online Marketplace is an activity of providing a place of business activity in the form
of an internet shop as an Online Marketplace Merchant to sell goods and / or
services. This transaction model, there is a reward, in the form of a rent fee or
registration fee, for the service of providing a place and / or time to display
advertisements of goods and / or services and make sales at internet stores through
internet malls. In addition, there is an amount of money paid by the Online
Marketplace Merchant to the Online Marketplace organizer as a commission for

payment intermediary services for the sale of goods and / or services. Example;
Tokopedia, Bukalapak, Rakuten, DuniaVirtual.
2) Classified Ads are activities providing a place and / or time to display advertisements
of goods and / or services carried out by advertisers through sites provided by
Organizing Classified Ads. Then the advertiser pays a sum of money as a transaction
fee to the Classified Ads organizer. Example; OLX, Trade.
3) Daily Deals is a business activity in the form of a Daily Deals site as a place where
Daily Deals Merchants sell goods and / or services to buyers using vouchers as a
means of payment. Example; Groupon, Evoucher.
4) Online Retail is the activity of selling goods and / or services carried out directly by
the Online Retail organizer to buyers on the Online Retail site. Example; Studiostar7,
Bhinneka, Gramedia.
2.3 Taxation in Indonesia
Abuyamin (2016) defines tax as a contribution to a enforceable state that is owed by
those who are obliged to pay it according to regulations, with no achievement returned, which
can be directly appointed, and whose use is to finance public expenditures related to state
duties to holding government.
Tax law is no different from other laws that have legal subjects as supporters of
obligations and rights. In tax law, not a tax subject as a supporter of rights and obligations but
is a taxpayer. According to the provisions of Article 1 Number 1 of the Law General Provisions
and Tax Procedures a taxpayer is an individual or entity who according to the provisions of tax
legislation is determined to carry out tax obligations, including certain tax collections or
deductions. In essence, the taxpayer must not be separated from the individual context so as
not to escape from his position as an individual. Meanwhile, the body as a taxpayer can be a
legal entity, and a legal entity, both subject to private law and those subject to public law. In
connection with the growing development of goods and / or services trading transactions
through the electronic system, hereinafter referred to as E-Commerce, there needs to be a
special affirmation related to tax collection both PPH and VAT on the E-Commerce transaction.
Income Tax
Article 1 The Income Tax Law defines income tax as a tax that is levied on tax subjects
for income received or obtained in a tax year. According to the provisions in the Income Tax
Act, an object of tax is any additional economic capability received or obtained by a Taxpayer,
whether coming from Indonesia or from outside Indonesia, which can be used for
consumption or to add to the wealth of the Taxpayer concerned, with the name and in any
form, including but not limited to:
a) Earnings from work in work relationships and free work
b) Income from businesses and activities
c) Income from capital, in the form of movable or immovable property, such as interest,
dividends, royalties, rent, and profits from the sale of assets or rights that are not
used for business
d) Other income
The amount of taxable income for domestic taxpayers and permanent establishments, is
determined based on gross income minus the costs of obtaining, winning, and maintaining
income and for individual taxpayers reduced by non-taxable income, while costs that may not
be deducted are costs costs referred to in Article 9 of the Income Tax Act. The following are
the types of Income Taxes that can be imposed on e-commerce entrepreneurs through a
deduction or collection mechanism, including:

1) Income Tax Article 21

Article 21 Income Tax Withholding is carried out among other things on income paid
by entities and individuals designated as withholders of Article 21 Income Tax for
compensation in connection with services and work, received by individuals.
Article 22 Income Tax Collection is carried out among other things on payments in
connection with the purchase of goods by the government treasurer and BUMN
designated as collecting Article 22 Income Tax.
Article 23 Income Tax withholding is carried out among others on payment of fees in
connection with technical services, management services, consulting services, and
certain other services, including intermediary services and place and / or time service
providers in the mass media, outdoor media or other media for the delivery of
information, which is received or obtained by the corporate taxpayer.
Article 26 Withholding Income Tax Article 26 is carried out for payment of
compensation in connection with services and work received or obtained by an
overseas taxpayer other than a permanent establishment.
Value-added Tax
Abuyamin (2016) defines Value Added Tax as a tax on consumption of taxable goods or
taxable services in customs areas carried out by a taxable entrepreneur (PKP) of an individual
or entity. According to the Law on Value Added Tax (VAT) and Sales Tax on Luxury Goods (PPn-
BM), which are subject to VAT tax are:
1) Submission of Taxable Goods and/or delivery of Taxable Services within the Customs
Area conducted by entrepreneurs who have been confirmed as Taxable
Entrepreneurs and entrepreneurs who should have been confirmed as Taxable
Entrepreneurs but have not yet been confirmed.
2) Import of Taxable Goods
3) Utilization of Intangible Taxable Goods and / or utilization of Taxable Services from
outside the Customs Area within the Customs Area
4) Exports of Tangible Taxable Goods, exports of Intangible Taxable Goods, and / or
exports of Taxable Services by Taxable Entrepreneurs.
2.4 Taxation in Indonesia for E-Commerce
The principles and objectives of e-commerce transactions are the same as other trades,
but differ in terms of the way or tool used. Therefore, there is no difference in taxation
treatment between e-commerce transactions and other trade transactions. The e-commerce
taxation regulations in Indonesia note that there are no new tax objects in e-commerce
transactions and need to realize uniformity in understanding aspects of ecommerce taxation
that occur in Indonesia. Taxes on E-Commerce transactions aim to apply justice to all taxpayers
both conventional and E-Commerce. Because basically the tax obligations of conventional
business people or E-Commerce are no different.
The five principles of e-commerce taxation that are the assessment for E-commerce
transaction regulations according to the OECD (2000) in a report prepared by the Committee
of Fiscal Affairs include: 1) Neutrality, tax provisions must be neutral for all forms of trade,
both electronic and traditional; 2) Efficiency, the costs such as compliance costs for taxpayers
and administrative costs for the Directorate General of Taxes must be really minimized; 3)
Certainty and simplicity, taxation regulations must be clear and easy to understand so that
taxpayers know the tax when the transaction is carried out; 4) Effectiveness and Fairness, the
tax calculation must be absolutely right at the right time; 5) Flexible, the taxation system must
be flexible and dynamic to ensure that the system can keep up with technology and trade

developments. The conditions set by OECD countries agree that the collection of income tax
on E-commerce transactions that have a Permanent Establishment uses the principle of
source, if it does not have BUT, then it uses the principle of domicile.
Taxes that can be imposed on E-Commerce transactions are Income Tax and Value
Added Tax. Because there are no rules that specifically regulate the treatment of PPH on E-
Commerce Entrepreneurs, so basically it is equated with conventional stores. Based on PP
Number 46 of 2013 concerning Income Tax on Income from Businesses Received or Obtained
by Taxpayers who have a Specific Gross Distribution that has been revised to PP Number 23 of
2018, E-Commerce entrepreneurs with gross income / turnover that does not exceed 4.8
Billion Rupiah is subject to tax equal to MSME, which is 0.5% of turnover. Whereas E-
Commerce business actors whose turnover reaches Rp 4.8 Billion per year or more than that,
are subject to Value Added Tax.
Regarding income tax from e-commerce, the Director General of Taxes has issued
several circular letters to confirm the tax payment obligation, including Circular of the Director
General of Tax Number S429 / PJ.22 / 1998 dated December 24, 1998 Concerning Appeals to
Taxpayers Conducting Transactions Through Electronic Commerce, Director General of Tax
Circular Number SE-62 / PJ / 2013 concerning Affirmation of Taxation Provisions for E-
Commerce Transactions, and Circular Letter Number SE-06 / PJ / 2015 concerning Withholding
and / or Collection of Income Tax on ECommerce Transactions. But it seems that the existence
of the circular referred to cannot provide stronger legal implications regulating ecommerce
perpetrators. In reality, the application of the circular that confirms the obligation to pay tax
has not yet been assessed whether it can be applied to the maximum considering that the
income tax collection system is a self-assessment system which gives the taxpayer the
authority to calculate, calculate, pay, and report the amount of tax themselves. owed. So, if
the Directorate General of Taxes does not have any other data other than those reported by
the taxpayer, the taxpayer report is considered to be true.
Taxpayers and Registration Obligers
For entrepreneurs or businesses in the e-commerce field who have fulfilled the
requirements as Taxpayers (WP), they must approve themselves to the tax ministry office
whose territory receives a residence or place of residence to obtain a tax ID. In accordance
with the Tax Treatment Regulations for E-commerce as outlined in the Regulation of the
Minister of Finance (PMK) Number 210 / PMK.010 / 2018. One of the regulations in this PMK is
traders and service providers that sell through the Marketplace Platfrom to have a Taxpayer
Identification Number (NPWP).
Until now, many e-commerce entrepreneurs have met the requirements as taxpayers,
but have not registered themselves. According to data obtained by DGT there were 1,600
sampling (e-commerce actors) that were tried, out of that number 600 had not yet been
identified and 1,000 had been identified. Of the 1,000 new business operators 620 that already
have a Taxpayer Identification Number (NPWP), of those who already have a NPWP, most have
reported but the report is not known, according to the facts that occurred during the
transaction. The data proves that there are still many non-compliant e-commerce taxpayers.
After being registered as a taxpayer, e-commerce entrepreneurs are required to record their
operational activities in the form of recording or bookkeeping so that the amount of business
circulation (turnover) and net profit can be known as a basis for calculating the income tax
payable in one tax year. Business actors or individuals, are entitled to a reduction in the form
of Non-Taxable Income (PTKP) in the calculation of their taxable income.
Withholding / Collecting Income Taxes
In e-commerce transactions, tax deductions are made for payment of services for
providing space and time in electronic media for the delivery of information, fees for payment
intermediaries or transaction fees, and other service fees for involving other parties. The

related taxes in this case are Income Tax Article 21.23.26, and Article 4 (2) Income Tax. In
addition, buyers must also collect Article 22 Income Tax for certain purchases made from
merchants or online retail providers.
Determination of the amount of income tax payable in one tax year is done by
multiplying the income tax rate Article 17 of the Income Tax Act against taxable income.
Individual taxpayers apply progressive rates from 5% to 30% according to their taxable income
layer. For corporate taxpayers, the sole rate is 25% of the net income of the business or
taxable income. Corporate taxpayers in the form of a public company that meets the
requirements can obtain a tariff reduction facility of 5% from the general rate. Special Income
Tax treatment also applies to e-commerce entrepreneurs, both individuals and entities, who
have a turnover in a tax year not exceeding Rp. 4.8 billion. The entrepreneurs are subject to
final income tax with a tax rate of 1%, calculated from turnover every month.
VAT Collection / Withholding
If up to one month in the calendar / calendar year the turnover of the delivery of taxable
goods or services exceeds Rp 4.8 billion, the e-commerce performer is obliged to report his
efforts to become a taxable entrepreneur. As a taxable entrepreneur, the e-commerce
entrepreneur's obligation is to collect VAT on each transaction that delivers taxable goods or
services by issuing a tax invoice (e-invoice). The e-commerce tax rate for Value Added Tax
(VAT) is 10%.
According to Winardi (2006) states that in accordance with OECD Characterization, the
types of e-commerce transactions carried out through the website and may be subject to
Value Added Tax, including (1) The electronic order process for intangible goods; (2) Electronic
orders and downloads of digital products; (3) Electronic orders and downloads of digital
products for the purpose of commercial exploitation of copyrights; (4) Update activities and
add completeness of software; (5) Granting permission for free to use a software within a
certain period; (6) Transactions where the buyer gets the right only once to use software or
other digital products; (7) Right to place software and technical assistance; (8) Agreement with
the copyright owner's provider to access the software; (9) ASP Transactions; (10) License fees
for ASP; (11) Giving a place on the server to be occupied by the website; (12) Software
maintenance; (13) Space utilization services for storing databases; (14) Technical assistance
conducted online; (15) Submission of information to customers; (16) Delivery of products in
the form of information along with additional customer data analysis; (17) Payment
transactions for advertising fees that appear; (18) Consultation for professional services; (19)
Confidential technical information; (20) Information sent to customers; (21) Access to certain
websites; (22) Placement of catalogs by online merchants; (23) Online auction; (24) Sales
referral program; (25) Content purchase transactions; (26) Broadcast-based streaming; (27)
Payments made by Content Providers to website operators so that their content is displayed
on the website; and (28) Subscriptions to websites that allow downloading digital products.
Taxation is related to E-commerce tax in Indonesia. do not have specific governing laws,
there is only a Circular (SE) governing the Affirmation of Taxation Provisions for e-Commerce
Transactions, namely SE / 62 / PJ / 2013. Director General of Taxes in Circular Letter Number
SE / 62 / PJ / 2013 concerning Affirmation of Taxation Provisions for Ecommerce Transactions
which confirms there is no difference in taxation treatment between e-commerce transactions
and trade transactions and / or other services. Therefore e-commerce tax regulations follow
the income tax and value added tax laws.
2.5 Taxation Problems in Indonesia for E-Commerce
The impact that must be considered by the tax authority if included in the income tax
rules is related to the nature of the mobile (does not have a fixed place) because the service is
digital. Unlike the traditional (conventional) economy which has a permanent establishment
and has a physical place. The physical location, goods and services produced can indicate his

physical presence (permanent establishment) and his physical presence can be used to
determine where taxes must be paid. Whereas in the digital economy almost all trade supply
chains are carried out virtually without a physical presence. Such nature, a permanent
residence, is no longer needed to generate income (Hadzhieva, 2016). In addition, the
anonymity of digital economic actors is caused by the difficulty in finding out the location, the
owner, and the ease of opening and closing a business. This is in accordance with the
statement of the Indonesian Minister of Finance Sri Mulyani who stated that the traditional
taxation model based on the physical presence of a company was considered to be no longer
relevant. a new taxation model that is using an economic activity approach (significant
economic presence).
The problem that arises with the digital economy is the difficulty in collecting VAT (Value
Added Tax) on cross-border trade in services and intangible goods. The challenge is the
difficulty of identifying companies in the digital economy because there is no paper trail at all,
determining the amount of tax, and increasing the ability to hide income and assets abroad
(Hadzhieva 2016). The next problem is how the tax officer treats workers in this field is
unclear. For example, if an online taxi worker, car transportation, or food delivery mobile
application (gofood), the driver uses his own car (Grab, GoCar) is considered an employee or
self-employment independent.
2.6 Inhibiting factors and solutions in the imposition of Income Tax and Value Added Tax
on E-Commerce Transactions in Indonesia
E-Commerce is one of the tax subjects that have the obligation to pay taxes without
exception. Supposedly, with the development of the E-Commerce business in Indonesia, there
is an increase in state revenue as well because the tax received by the state is greater, but in
reality the state revenue from taxes is still far from the target. This raises the possibility that
many taxpayers do not report their obligations and there are also taxpayers who report but
paid taxes do not comply with applicable tax provisions. Besides other inhibiting factors is
because transactions through E-Commerce are able to penetrate geographical boundaries
between countries, other than that the form of goods or services traded can be digital such as
computer software, music, magazines and others. So that physical transactions are no longer
needed and are replaced with digital transfers only. E-Commerce transactions around the
world occur so quickly in such a short time that taxation of E-Commerce Transactions requires
special rules that can capture potential taxation based on these conditions.
The fact that online businesses are not yet registered also results in tax collection from
the online sector being suboptimal. Because the truth of the database is crucial to test the
correctness of tax payments with the Self-Assessment system. The ineffectiveness of the
taxation of these online business actors is very unfortunate considering the tax potential that
can be obtained is very large and cannot be specifically touched by the taxation system due to
the weak efforts in capturing this potential. This can also be caused by unclear and real points
of sale, making it difficult to detect the truth of the existence of an online business actor. The
awareness of online businesses as taxpayers is also still low so this creates a gap that results in
reduced state cash receipts. Online businesses as taxpayers should also be required to have a
Taxpayer Identification Number (NPWP) as a means of tax administration, which is useful as a
sign of self-control or identity of taxpayers in carrying out their tax rights and obligations
contained in each tax document and can maintain order in tax payments and supervision of tax
administration. There are several solutions that can be done to reduce the inhibiting factors in
the imposition of Income Tax and Value Added Tax in online businesses.
In Indonesia, tax collection uses a Self-Assessment System where the taxpayer himself
calculates and assesses the fulfillment of his tax obligations. This results in the ineffectiveness
of fair income tax collection for each party in Indonesia. The government should make rules
specifically regulating the taxation of both the Income Tax and the Value Added Tax for E-

Commerce transactions and also for conventional transactions, so that justice for all
Indonesian people can be created. Factors Law enforcement also plays an important role in
this regard. Law enforcers must be strict and carry out regular supervision so that there are no
loopholes for taxpayers to neglect their obligations to pay taxes in accordance with taxation
provisions in Indonesia. Supervision of the government should also be increased so that it can
reduce the potential for misuse of collected taxes.
The public as a taxpayer should be given education about the importance of paying
taxes for a country and to be given good and correct directions on how to pay taxes, so that it
is expected that the public can be aware and pay taxes on time and in accordance with tax
provisions. So that the self-assessment system in Indonesia can run effectively. The
government should also remain open and be able to provide comparable benefits to the
country's development and if possible can require each online business actor to have an online
business license and be registered so as to facilitate the supervision and imposition of taxes on
E-Commerce actors in Indonesia.
3. CONCLUSION AND SUGGESTION

Conclusion
The emergence of a digital economy has changed the way of business which was
originally conventional to completely digital (online). The digital economy has a significant role
for the growth of the world economy, as evidenced by the large amount of revenue earned
from E-Commerce transactions. This will have an impact on taxation in Indonesia as a source of
state revenue or income. Therefore the Indonesian government must regulate taxation related
to transactions that will be incurred in order to optimize state revenue. The Indonesian
government does not yet have more specific rules, there is only a Circular (SE) governing the
Affirmation of Taxation Provisions for e-Commerce Transactions namely SE-62 / PJ / 2013 e-
commerce tax regulations following the income tax and value added tax laws.
The inhibiting factors of collection of Income Tax and Value Added Tax on E-Commerce
Transactions in Indonesia can be seen from the factor of awareness of online businesses in
paying taxes that are still low, weak law enforcement against taxpayers who do not fulfill their
obligations, there is no obligation to have NPWP for online businesses, and there are no
regulations that specifically regulate the taxation of these online businesses. There are several
solutions that can be done, namely by issuing appropriate implementing regulations and can
specifically reach the tax potential of the E-Commerce, then increase supervision from law
enforcement both for the government to avoid abuse and for taxpayers to complete their
obligations.
Suggestion
The existence of a digital economy poses many challenges for policy makers. Policy
makers must pay attention to what changes and developments will be regulated. Reviewing
nomenclature of permanent establishment (BUT) so companies that run digital businesses
(online) can be included in it or create better tax schemes. Due to the large number of trade
flows through social media, it is difficult for the government to register data, so the
government must make regulations related to E-Commerce, which involve government
agencies, namely the Ministry of Information Technology, the Ministry of Finance and also
Financial Institutions to detect E-Commerce transactions.
Furthermore, the Directorate General of Taxes can re-socialize the application of taxes
on e-commerce transactions, bearing in mind the growth of e-commerce transactions from
year to year is increasing. Socialization can be done to MSMEs in each region or to Online
Marketplace and Classified Ads owners, considering that there are not many business people
in the two types of transactions who are obedient or have the awareness to pay taxes.

4. REFERENCE
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Laudon, L., Kenneth C., and Jane, P. (2012). Management Information System: Managing the
Digital Firm. New Jersey: Prentice-Hall.
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manusia/ Retrieved January 17, 2018.
Organisation for Economic Co-operation and Development (OECD). (2005). Are the Current
Treaty Rules for Taxing Business Profits Appropriate for E-Commerce?: Final Report.
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Rahayu, S. K. (2010). Perpajakan Indonesia: Konsep & Aspek Formal. Bandung: Graha Ilmu.
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Sandhusen, R. (2008). Marketing. N.Y: Barron’s Educational Series.
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Pajak yang Melakukan Transaksi Melalui Electronic Commerce.
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Perpajakan atas Transaksi E- commerce Internasional.
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ONLINE BUSINESS (E-COMMERCE) IN INDONESIA TAXATION

[R. Wiratama, M. Asri, & P. Tangke]

ONLINE BUSINESS (E-COMMERCE) IN INDONESIA TAXATION

Keywords : E-Commerce, E-Commerce Transaction, Online Business, Digital Economic,

Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 1

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Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 2

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Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 3

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2.1 Digital Economic and Online Business

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1) Income Tax Article 21

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3. CONCLUSION AND SUGGESTION

Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 11

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Abuyamin, O. (2016). Perpajakan. Bandung: Mega Rancage Press.

Fakultas Ekonomi dan Bisnis Universitas Atma Jaya Makassar 2020 12

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