International Journal of Advanced Science and Technology

Vol. 29, No. 08, (2020), pp. 1212-1222

Public Benefit Principle in Regulating E-Commerce Tax on

Consumer’s Location in Indonesia
Anis Wahyu Hermawan1*, Henry Dianto Pardamean Sinaga2
1
Staff of the Directorate General of Taxes, and Indonesia Open University, Indonesia
2
Staff of the Directorate General of Taxes, and Law Doctoral Program of the Diponegoro
University, Indonesia
Corresponding E-mail: aniswahyu524@gmail.com

Abstract

The value of e-commerce transactions in Indonesia which is always increasing, in

addition to contributing to the general welfare of the people, must also face challenges
and complexities that affect tax revenue. Until now, the benefit of e-commerce
transactions in the tax sector has not yet been ascertained, such as tax revenue for the
achievement of e-commerce transactions in 2019 which has reached USD 40 billion, and
the number of traders and buyers who already have a Taxpayer Identification Number
and or have reporting tax obligations. Based on a literature review within the framework
of sociological jurisprudence by using the theory of expediency, two conclusions are
generated. First, special regulations governing e-commerce tax do not currently exist in
Indonesia, beyond the general rules contained in Government Regulation Number 80 the
Year 2019 on Trade Through Electronic Systems which still has limitations in handling
the challenges and complexity of e-commerce taxes. Second, the e-commerce tax
regulation on consumer's location based on the principle of public benefit in Indonesia
must be done through simplifying the requirements, simplifying the imposition and
payment of taxes, and simplifying the information system and technology for taxpayers
conducting e-commerce transactions. It is proposed that the DGT regulates the
imposition of e-commerce tax directly deposited by consumers in Indonesia with the
notification of the seller of goods and or e-commerce platforms through the application of
a simple and secure online tax payment system.
Keywords: public benefit, tax, e-commerce, consumer’s location

1. Introduction
The results of Google-Temasek-Bain (2019) research which recorded a
combination of electronic commerce (e-commerce) Gross Merchandise Value
(GMV) transactions with Online Travel, Online Media, and Ride Hailling in
Indonesia have reached USD 40 billion (and the value of these transactions
estimated to continue to increase to USD 133 billion in 2025) shows that e-
commerce can potentially be one of the drivers of the domestic economy, contribute
to increasing Indonesia's gross domestic product (GDP), can bring greater socio-
economic impacts and encourage inclusive economic growth [1].
However, high hopes for the benefits of e-commerce remain constrained by the
many challenges and interconnected complexities that must be faced by the
government, especially the tax authorities. The most difficult challenge related to
compliance tendencies with taxpayers, including e-commerce actors, will be to
consider the most beneficial actions among the available choices (rational action),
including the choice of incentives to break the rules or break an agreement rather
than having to obey a certain law [2]. The challenge of tax compliance is certainly
not spared from the efforts of certain parties who carry out complex e-commerce
transactions that involve cross-border in several countries. Lee and Hwangbo
illustrate this with purchases made from country A where the seller is in country C
by using a cyber shop or platform that could be in country A or country B or country

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C, and then the goods will be sent through a warehouse that could be in country A
or country B or country C [3]. The challenges and complexity resulting from e-
commerce and the like cause tax avoidance and tax evasion on a global scale, as the
Organization for Economic Co-operation and Development (OECD) indicates a loss
in the scope of base erosion profit shifting (BEPS) of around 4% - 10% from global
corporate income tax receipts, or around USD $ 100 - $ 240 billion annually [4], and
the fact that tax reporting for the e-commerce transaction in Indonesia which has
reached USD 40 billion has not yet been obtained, given the study conducted by
Sari on 1,600 e-commerce actors found that a total of 600 e-commerce actors were
apparently not identified. Then, of the 1,000 e-commerce actors identified, only
62% already have a Taxpayer Identification Number (NPWP), and of e-commerce
players who already have the NPWP, only 50% have reported Tax Returns (SPT),
where the report has not been known the truth of the reporting [5]. This has always
been a common problem given that one of the characteristics of the internet, which
is a popular trade route today, is the inability of the tax authorities to be able to
centrally control the sale and purchase of goods and services on the int ernet. As in
Indonesia, even though there are regulations on trade and about trading through
electronic systems, there are always e-commerce transactions that are never taxed
due to some common problems, such as companies that can run their websites in tax
heaven countries, lack of agreement on tax liability calls for e-commerce
transactions, no special tax treatment in e-commerce transactions, and no technical
rules for determining which customer posts can be checked [6].
Given the need for tax authorities in Indonesia, which is the Directorate General
of Taxes (DGT), to be able to maximize benefits and minimize adverse
consequences in terms of the rise of e-commerce transactions, this research seeks to
address two main problems. First, how are the consumer’s location rules in the e-
commerce tax regulations currently in effect in Indonesia? Second, how is the e-
commerce tax arrangement based on the principle of public benefit in Indonesia for
the consumer's location?

2. Literature Review
The complexity of micro and macro economics, organizing and administering e-
commerce [9] has triggered loophole and efforts to avoid tax liabilities from certain
parties involved in e-commerce transactions because they are considered as a factor
to increase the price of goods/services [10], as several studies have reviewed.
Viboonthanakul revealed that e-commerce and commerce on the internet caused
smuggling problems which caused the government to lose revenue from several
commodities, such as cigarettes, household appliances, textiles, clothing, footwear
and leather goods, books, and stationery [11]. Selinsek revealed that smuggling,
which is generally a movement of goods across national borders by avoiding the
supervision of customs officers, and or using certain company facilities, certain
groups, or through coercion accompanied by certain threats, is one form of tax
evasion [12]. Yapar, Bayrakdar, and Yapar found that e-commerce allows
businesses to earn their income without a physical presence, where many state
taxation policies by region and jurisdiction begin to fail after improving e-
commerce, then concepts such as permanent establishment, sales location, and
classification the products, and income used in the taxation process remain
inadequate, and the model of determining the location of sellers and consumers in
transactions on the internet is rather difficult. The implications of e-commerce have
caused the tax administration to barely get clear information about the amount of tax
that has been collected from e-commerce transactions [13].

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The complexity of e-commerce must be dealt with immediately considering the

law should be able to be a means for social engineering of the community, including
the e-commerce community, which is always transforming, because the parties
involved in e-commerce activities can use the law consciously make changes to
society in an orderly [14] and orderly manner. Reference tax law in Indonesia as a
suggestion for community change can adopt the Pound's thinking which explicitly
states that law as a tool of social engineering, which means the state must be able to
pay attention to the functioning of law in society (functional jurisprudence) [15]. So,
this theory is expected to function the law in dealing with e-commerce tax
challenges in Indonesia, which should develop and develop their processes starting
from historical and philosophical jurisprudence on the use of social sciences,
especially sociology, towards wider and effective legal science. [16]. The feasibility
of sociological jurisprudence in this study can be seen from the task of social
engineering to construct and or reconstruct laws in the field of taxation in the face
of social phenomena that are always changing. The social engineering, according to
Pound, must be aimed at 3 (three) groups of interests that must be legally protected,
namely: 1) public interests, 2) social interests, and 3) personal interests. Public
interests include the interests of the state as a legal entity in maintaining its
personality and nature, and the interests of the state as the guardians of social
interests. Whereas personal interests consist of interests in household relations and
interests in a substance which all include physical integrity, freedom of will,
personal freedom, freedom of religion and opinion [17].
This research on handling tax challenges in terms of consumer's location in e-
commerce transactions based on the guidance of sociological jurisprudence is
expected to maximize the principle of public benefit, as its philosophical
background cannot be separated from utilitarian understanding pioneered by Jeremy
Bentham and John Stuart Mill. Bentham put forward the principle of utility, which
places expediency as the primary goal of the law. This view asserts that the purpose
of the law is to provide guarantees of happiness to individuals, whose emphasis
begins on humanity whose nature is placed under the rule of 2 (two) sovereign
powers, namely displeasure and pleasure. In accordance with its nature, humans
always try to avoid displeasure and try to find pleasure. Because his nature is always
directed towards happiness, then an action can be judged as good or bad, as long as
it can increase or reduce happiness as much as possible. The morality of action must
be determined by weighing the usefulness to achieve human happiness [18].
Bentham's thought was then deepened again by John Stuart Mill by stating that the
size of the good and bad actions must be measured in terms of the benefits generated
because the highest good is utility, as utility is a happiness for the maximum number
of humans [19]. Mill's view asserts that certain actions will be considered right if
the light tends to increase happiness, but will be considered wrong if it tends to
result in reduced happiness [20]. In addition, Mill also believes that on a scale of
public utility, although justice has a higher position than a set of existing moral
requirements, some other important public obligations can override one of the
common maxims of justice. In this case, it can be said that justice should give way
to several other moral principles so that the character of the uncertainties attributed
to justice can be monitored, and humanity saved from the necessity of maintaining a
commendable injustice [20].
The philosophical understanding of the benefits of the public guides knowledge
about handling e-commerce tax challenges. The series of components forming
public benefit is very necessary to solve the e-commerce tax challenge, as Adam
Smith thought about the convenience of payment, which means t hat tax collection
should be done at the nearest time the income is received, and efficiency, which
means that tax collection must be done as economically as possible and the cost of

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the collection does not exceed tax revenue, and the OECD's idea of efficiency and
flexibility contributes to handling e-commerce tax challenges. The efficiency
principle stated by the OECD is related to tax compliance and administration costs
must be minimized by the tax authority, while the principle of flexibility is related
to the taxation system which must be flexible and dynamic while keeping abreast of
technological and trade developments [21].

3. Method
This research is library research with its constituent components in the form of
normative components and other moral and substantive considerations which are
interrelated and produce coherence in many aspects [7], such as law, economics, and
technology.
In order for this research to find as much information as possible in answering
existing problems, three levels of bibliographic sources are used, each of which has
a different role in research or writing, namely tertiary, secondary and primary
sources. Tertiary bibliographic sources provide a review of the most common and
non-technical topics, for example almost all textbooks and articles in popular
newspapers or magazines, dictionaries, and encyclopedias. Secondary bibliographic
sources are between tertiary and primary sources, where secondary sources are
deeper than textbooks or other tertiary sources. In general, secondary sources are
comprehensive reviews written by an expert on the topic, such as book reviews and
literature. The primary bibliographic source is the original research report which can
be found in a research journal. It is the research article that represents the greatest
level of focus and detail from all bibliographic sources. The advantage of
multiplying this main source is due to the need not to filter information anymore,
because the main source is considered to have provided a detailed description of the
research method, data analysis, and complete research results [8].

4. Result and Discussion

4.1. Overview of e-commerce
The Prime Minister of Singapore, Mr. Goh Chok Tong, has a vision that the future
belongs to countries whose key factors for economic success always use information,
knowledge, and technology productively [22]. This vision is proven true in the future,
where many countries increasingly realize how important the digital economy is for
sustainable economic growth and to provide a better quality of life for its citizens [23], as
evidenced by the variety of advantages offered to individuals or groups, such as the ability
to cut costs, the availability of communication and fast information, and the creation of
new markets for certain products and services. The rapid development of the digital
economy has also spurred e-commerce transactions, which has made it a prima donna for
many countries, especially to enhance economic growth, productivity, and
competitiveness in international trade [10]. The success of e-commerce has been proven
by several digital global economic companies, such as eBay which successfully held
auctions around the world, Alibaba.com which succeeded in providing goods and services
to millions of people and companies, and Amazon.com which succeeded in selling retail
books. and millions of other items [24].
There are various definitions of e-commerce so far. The definition in the global
context was put forward by Deitel, Deitel, and Steinbuhler who asserted that e-commerce,
although it has the same elements as e-business and is equally a means to increase the
speed and ease of trade transactions, are things that are related by exchanging between

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customers, business partners, and vendors, for example, suppliers who interact with
producers, customers who interact with sales representatives, and shipping providers who
interact with distributors (without including operations handled in the business itself, for
example, production, development, company infrastructure, and product management
because it is an e-business scope) [25]. Whereas the definitions in the context of law in
Indonesia are formulated in Article 1 number (2) of Government Regulation (PP) of the
Republic of Indonesia (RI) Number 80 of 2019 concerning Trade through Electronic
Systems, which defines Trade Through Electronic Systems (PMSE) as Trade whose
transactions are carried out through a series of electronic devices and procedures. As for
business actors in e-commerce consisting of Domestic Business Actors (including
Traders, PPMSE, and Domestic Intermediary Facility Providers) and Overseas Business
Actors (including foreign Traders, PPMSE, and International Intermediary Facility
Providers) (Article 5 PP No. 80 of 2019).
The existence of several definitions of e-commerce is apparently not so easily
translated into trading practice. For domestic transactions (in Indonesia), for example,
many companies currently have outlets and carry the concept of one-stop shopping, and
offer their products through the company's website, at least in the form of 5 (five)
patterns. First, there is a direct payment and sale transaction between the buyer and seller
at the store or sales shop. Second, there is a cash on delivery (COD) transaction, where
consumers order goods online and pay for goods when the goods have been received by
consumers. Third, consumers order goods online, and then these consumers come to
supermarkets to pay and take goods. Fourth, consumers order goods online, then pay for
them by transfer, and then the consumer comes to the supermarket to pick up the goods.
Five, consumers order goods online, pay for transfers, and companies send goods to
customer locations. Of course, if what happens is the first and fifth forms of buying and
selling will be confirmed that the transaction is conventional trading and e-commerce.
Whereas the second, third, and fourth patterns are still relatively difficult to identify and
give rise to various interpretations in terms of their categorization of conventional
commerce or e-commerce.
In addition to trade patterns in practice, policies relating to e-commerce tax collection
in Indonesia have actually been prepared in Minister of Finance Regulation (PMK)
Number 210 of 2018 concerning Tax Treatment of Trade Transactions through Electronic
Systems (e-commerce), but regulations It was revoked before it took effect on April 1,
2019, because it gave rise to pros and cons. In Article 3 paragraph (1) PMK No. 210 of
2018 regulates that e-commerce of goods and/or services in the Customs Area can be
done through Marketplace Platforms or Platforms other than Marketplace that can be
online retail, classified ads, daily deals, or social media. What is meant by marketplace
platforms are Parties, whether individuals, entities, or Permanent Establishments (BUT)
who reside or are domiciled or have business activities within the Customs Area that
provide platforms in the form of Marketplace, including Over the Top in the field of
transportation within Customs Area (Article 1 number 15 PMK No. 210 of 2018). Then,
Article 3 paragraph (2) of the PMK outlines 4 (four) ways of e-commerce of goods and/or
services through the Marketplace Platform in Indonesia, namely: (1) Marketplace
Platform Providers provide e-commerce services for goods and/or services ; (2) Traders
or Service Providers use Platform facilities provided by Marketplace Platform Providers
to conduct e-commerce; (3) Buyers of goods or service recipients make purchases of
goods and/or services through Marketplace Platform Providers, and (4) Payment for trade
in goods and services through e-commerce by buyers to Traders or Service Providers is
done through Marketplace Platform Providers.
The existence of patterns in practices and ways in e-commerce in Indonesia also still
raises e-commerce transaction derivatives, for example, the company uses several social
networking sites to promote its products so as to bring up promotional services called

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endorsements. Then, there are also a number of different e-commerce characteristics,

namely between those based on the use of social media sites and those based on
marketplace platform company services. The broad scope of e-commerce is also seen in
PP No. 80 of 2019 which not only regulates e-commerce transactions, but also includes
things such as delivery mechanisms, payments, advertisements, and electronic contracts,
so the implementation of these regulations needs to take a comprehensive approach.

4.2. Consumer’s Location Rules in E-Commerce Tax Provisions in Indonesia

Even though general provisions regarding e-commerce have been published in
accordance with PP No. 80 of 2019, but until now specific regulations regarding taxation
in e-commerce have not yet been issued. However, in the regulation, there are several
provisions that can be utilized by the DGT, such as Article 7 and Article 8 PP No. 80 of
2019.
Article 7 PP No. 80 of 2019 which regulates overseas business actors actively
conducting e-commerce activities and/or offers to consumers in the jurisdiction of
Indonesia and as long as they meet certain criteria, such as the number of transactions,
transaction value, number of shipping packages, and/or the amount of traffic or accessors,
have confirmed the existence of an obligation to appoint representatives who act as and
on behalf of the Business Actor in Indonesia. Unfortunately, the Ministerial Regulation
which refers to further criteria has not been published to date. In addition, the article is
still very absurd considering that it is not explicitly defined what is meant by "active
foreign business actors" bearing in mind that there are still potential obstacles, such as the
jurisdiction of the Indonesian government in intervening in countries where foreign
business actors are registered in terms of dividing information, as well as the potential for
a growing number of domestic consumers to conduct transactions on e-commerce
platforms abroad and whose jurisdiction is in tax heaven countries whose payments can
use offshore banking or offshore banking.
Then, Article 8 PP No. 80 of 2019 which confirms that the e-commerce business
activities apply the provisions and taxation mechanisms in accordance with the provisions
of the legislation in force. In addition, there are rules that require e-commerce businesses
to meet general requirements in accordance with applicable provisions (Article 11 PP No.
80 of 2019), including taxation provisions, and to store data and trade information for 10
years after the data or information is obtained (Article 25 PP No. 80 of 2019). Article 8
PP No. 80 of 2019 and the absence of specific regulations regarding taxation in the field
of e-commerce has become contradictory to one of the tax revenue optimization policies
that seek to create a level playing field for all business actors, both conventional and e-
commerce, as well as government efforts to minimize double taxation, double non-
taxation, and BEPS [26]. Of course, the creation of level playing fields in the field of
taxation for conventional and e-commerce businesses is highly awaited, and can only be
realized if there are special regulations regarding taxation in the e-commerce field given
the differences between e-commerce and conventional trade, as the most different. crucial
seen in Article 1 number 24 of Law no. 7 of 2014 concerning Trade and Article 1 number
2 of Law No. 19 of 2016 concerning Information and Electronic Transactions identifies e-
commerce as a legal act in commerce whose transactions are carried out through a series
of electronic devices and procedures.
There is a difference between e-commerce and conventional trade, but the absence of
specific regulations regarding taxation in the field of e-commerce is clearly not justified
even though certain parties are grounded in the understanding that the clauses have both
fulfilled the tasbestand (actions, circumstances, or events) as a condition for the
emergence of tax debt [27], so assuming that according to the principles of good tax
regulations, tax regulations are not allowed to provide different treatment. Of course, the

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issue of justice that wants equality of tax treatment is contrary to the principle of
expediency desired by Mill which has asserted that although justice has the highest
position among the existing moral pool, justice should give way to other moral principles,
such as the principle of expediency, which turns out to have an urgency to fulfill
obligations to the public at large. For example, if there is an equal tax treatment between
conventional trade and e-commerce, while e-commerce investment is very loaded with
the latest technology which is very expensive and the value of benefits is very fast, it is
feared that taxpayers in the e-commerce field will make efforts certain efforts that change
the form of business from one form to another as long as it provides benefits in the form
of smaller tax payments [28]. Conversely, if the tax authority adopts a "service and client"
approach as a means of trusting, taxpayers in the e-commerce field will voluntarily
comply with their tax payments, because the efforts made are beneficial in streamlining
costs, both for the state and taxpayers, such as minimize the costs that must come out in
the event of a tax audit that in the case of an already very high level of compliance should
not need to be done again [29].

4.3. E-Commerce Tax Arrangements that Use the Public in Indonesia against
Consumer’s Location
Considering that currently there are no specific provisions regarding e-commerce
taxation in Indonesia and the tax law should be able to be a tool to manipulate e-
commerce communities that tend to always transform, it is necessary to understand e-
commerce tax arrangements that are publicly advantageous based on pro and contra
arguments against e-commerce tax and consumer's location. Chou put forward an
argument supporting the imposition of e-commerce tax based on the following points: 1)
every profit or transaction resulting from every sale, including e-commerce, must be
taxed; 2) taxation for e-commerce regarding adjustments to internet usage that is in the
public domain and is open to all; 3) e-commerce tax can support the development of
internet technology; and 4) the imposition of e-commerce tax does not only increase state
tax revenue, it is also due to neutrality and horizontal equity considerations [6]. Then, the
arguments against the imposition of e-commerce tax raised by Chou and Jin related to the
following matters: 1) the imposition of e-commerce tax will hamper the expansion,
growth, and efficiency of e-commerce in the future; 2) the difficulty of tracking sales
transactions on the Internet, such as the ease of downloading software, email addresses
that can be made in large quantities, payments can be made by credit cards or electronic
money or transfers that can use foreign banks or offshore banking; 3) applicable e-
commerce legislation is unclear; 4) the current complicated multistage tax structure and
system, especially due to interstate vendors; and 5) as the government's full support for
the growth of internet technology [6, 30].
Then, in terms of consumer’s location, Lee and Hwangbo summarize 6 (six) important
principles in identifying the jurisdiction of a country. First, in the case of the location of
the consumer's residence, the consumer must report the address of the residence to the
merchant so that the merchant's software must have a trigger in the jurisdiction of the
country where the consumer software is located, and the merchant requires a consumer
certificate as authentication. Second, in the case of the location of the order, the consumer
must report the location of the order so that the merchant can identify the country of the
customer, and the merchant needs extra work to confirm the location of the order based
on the IP address. Third, in the case of delivery locations, the consumer must report the
delivery location. Of course, this process does not require extra effort, but the delivery
point may not be to the country of the consumer but to other countries whose treatment
can apply as a gift to the recipient. Fourth, in terms of the location of actual consumption,
there will be difficulties in confirming the location of actual consumption, and it is almost
impossible to implement. Fifth, in terms of payment, this will only cause ambiguity to

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determine payment locations in cyberspace, as well as the possibility of consumer and

electronic accounts in different locations. Sixth, in terms of the location of the consumer
bank, it will cause bank citizenship to be easily identified, thus causing the use of foreign
banks as payments [3].
From the description of the pros and cons of the imposition of e-commerce taxation
and the description of consumer's location in terms of e-commerce transactions, it can be
understood that the regulation of e-commerce taxation will become more complicated and
complex when therein stands out the supremacy of each moral principle, namely justice,
expediency, and legal certainty. E-commerce tax regulation which is expected to create
legal certainty can potentially cause friction between justice and benefit due to different
demands and/or changes in its implementation, so a solution is needed that can answer
problems that one of its foundations is to realize tax compliance that strengthens the
taxation system in Indonesia [31]. Care should be taken based on moral principles in
making e-commerce tax rules in addition to the existence of PP No. 80 of 2019 which
seems to have been considered to provide legal certainty, given PP No. 80 of 2019 still
has some weaknesses, as explained in Article 7 and Article 8 of the government
regulation. Even if it is associated with public benefit and counter argumentation over the
imposition of e-commerce tax, Article 17 paragraph (1) PP No. 80 of 2019 which
regulates that domestic and foreign e-commerce are prohibited from accepting domestic
and foreign traders who do not meet certain requirements (such as business licenses,
technical licenses, Company Registration Numbers, Taxpayer Identification Numbers
(NPWP), business conduct/code of practices, standardization of products of goods and/or
services and other things in accordance with the provisions of the legislation), can
potentially hamper the expansion, growth, and efficiency of e-commerce. Obviously these
requirements will be difficult to meet among individual traders, especially in Article 5 PP
No. 80 of 2019 which confirms that temporal and non-commercial sellers of goods and/or
services do not include traders, where the reference to temporal and non-commercial
sellers of goods and/or services themselves is not clear enough to be understood, such as
its scope on any legal subject, whether individuals or bodies and so on.
In dealing with this e-commerce tax issue, a focus on the principle of expediency is
very much needed, as Taylor has emphasized that benefits can be combined with justice
(although sometimes showing inconsistent results) to enforce an adequate condition to be
able to justify a social regulation when the benefit and such justice can operate as an
independent criterion [32]. The idea of public benefit according to Taylor, as a condition
needed for the justification of social rules based on the concept of utility built from
individual ideas as a good foundation for commitment to social rules [32], is very much in
line with Mill's thought that asserts that utilities will guide the character of a rule from
uncertainty attributed to justice and which can save a rule from having to maintain the
existence of injustice that has been considered legitimate. The principle of public benefit
in regulating e-commerce tax in Indonesia shows that each party involved in e-commerce
activities can interpret various options so that their preferences [31] put the interests of the
nation, state and society first, as well as laying the laws and provisions of taxation laws in
each policy and control in the field of e-commerce should fulfill national interests in its
efforts to realize the ideals of public welfare (Article 2 PP No. 80 of 2019). The principle
of expediency will at least guide the parties involved in e-commerce to be actively
involved in realizing the aspirations of public welfare and show that the state has adopted
the boundaries of tax guidelines as a means of legal certainty and social rules to guide the
development and development of e-commerce in an orderly and orderly manner [33].
Back to the issue of regulating e-commerce tax on consumer’s location. Although it
has not yet been enacted, several provisions in PMK No. 210 of 2018 actually contains
several important things that are in accordance with the framework of the law as the tools
of social engineering and the principle of benefits that should meet the welfare of as many

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people of Indonesia as possible. One of them is the existence of an article in the regulation
that requires traders or service providers to notify the NPWP to the platform. If you do not
yet have an NPWP, then the merchant needs to obtain an NPWP via e-commerce or
provide the Population Identification Number (NIK) to the platform. Obviously the
fulfillment of these requirements is simpler and easily accepted by e-commerce actors so
that the database obtained based on NPWP and NIK can be empowered on 6 (six)
consumer’s location principles proposed by Lee and Hwangbo.
This simplification of requirements greatly strengthens existing marketplace platform
companies in Indonesia or overseas platforms (but has a market base in Indonesia) and
wants to comply with tax regulations in Indonesia to escape the fear of massive migration
of marketplace platform users to site products social networks like Facebook, Twitter, and
Instagram. Because if e-commerce transactions are carried out through social networking
sites like Facebook, Twitter, and Instagram, then buying and selling transactions via the
internet will be difficult to detect even though the DGT has the ability to request national
banking data information, but various ways to do tax avoidance can still be done, for
example, payment transactions through offshore banking or credit cards or foreign
account transfers or bank receipts or bank payments made not through the accounts of the
parties to the transaction. Then, the simplification of these requirements can be followed
by the simplification of taxation in the e-commerce environment, the proposal of which
can take into account the ideas put forward by Lee and Hwangbo in order to use the
characteristics of value-added tax directly deposited by consumers in Indonesia without
supplier intervention [3]. The mechanism can be done through building an online tax
payment system application whose notification is immediately known to the seller of
goods and or e-commerce platforms. Of course, this mechanism can spur
consumers/buyers to submit applications to become taxable entrepreneurs voluntarily in
order to be able to credit their input taxes.
Furthermore, by simplifying the requirements of the perpetrators of e-commerce
transactions, the regulation of e-commerce tax treatment based on the consumer's location
can be done with the principle of clarity of purpose as formulated in Article 5 letter an of
Law No. 12 of 2011 concerning Formation of Laws and Regulations, namely the
achievement of the goal of establishing laws and regulations in the field of e-commerce in
the form of the emergence of costs that become cheaper when calculated with the
potential benefits obtained by the actors of e-commerce and at the same time the potential
tax revenue received by the state to be bigger than what is lost in the e-commerce sector.

5. Conclusion
This research produces two main conclusions. First, e-commerce tax regulations
as the lex specialist of the Government Regulation No. 80 of 2019 do not currently
exist in Indonesia, so legal certainty in determining tax potential based on
consumer’s location cannot be done by the DGT. Second, e-commerce tax
arrangements based on the principle of public benefit in Indonesia for consumer's
location must be done through arrangements that strengthen voluntary compliance
while at the same time spurring the orderly, orderly expansion and growth of e-
commerce. The regulation must explicitly regulate the simplification of the
requirements for actors in e-commerce, the simplification of tax imposition and
payment by consumers, and the simplification of information systems and
technology in the case of e-commerce transactions of taxpayers. The principle of
expediency in regulating e-commerce tax must be applied so that people do not
conduct e-commerce transactions through social networking sites which would
actually make it difficult for the DGT to track its data to social networks that are
based in the United States given the limitations of technology and information

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Vol. 29, No. 08, (2020), pp. 1212-1222

exchange cooperation. involving between countries. It is proposed that taxation in e-

commerce be directly deposited by consumers in Indonesia (without supplier
intervention) by building an online tax payment system application whose
notification is immediately known to the seller of goods and or e-commerce
platforms.

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