Indonesia will now require e-commerce sellers to share data with authorities and pay VAT and income taxes, reports Reuters. Due to come into effect in April, the new rules passed by the finance ministry will require e-commerce platforms to give data on how much money each vendor has made while selling through the marketplace.

Indonesia’s tax department said that the rules were brought in to clarify the taxes that each player in the marketplace system is required to pay, and to bring them at par with conventional businesses.

  • Sellers with revenue of 4.5 billion Indonesia rupiah are required to charge value-added tax (VAT) to buyers.
  • Small or medium size businesses will have to pay 0.5% of their revenues as income tax, while larger businesses will have to pay 25% of their revenues as corporate tax.

Indonesia’s Ecommerce Association said the new rules would drive sellers to sell on social media platforms. Ecommerce marketplaces like Tokopedia and Bukalapak said they are studying the possible impact of the new rules. The largest e-commerce players — Lazada and Tokopedia — are both backed by Chinese e-commerce giant Alibaba. Another online marketplace, Bukalapak, is backed by Ant Financial, which is an arm of Alibaba.

E-commerce: policy changes in India

Last month, the Indian government issued updates on the country’s FDI in the e-commerce policy.

  • The policy requires that none of the big sellers – Cloudtail, Appario, WS Retail, and others – can trade more than 25% of their stock via one marketplace. If the marketplaces allow this, they would become an inventory based model of business in which FDI is now allowed.
  • Second, if the marketplace has an equity stake in any seller entity, the vendor is not permitted to sell on the marketplace. This means that sellers like Appario, which was formed as a joint venture between Amazon and the Patni Group, cannot trade on Amazon.

The Union government had initially released the Draft National E-commerce Policy in August; the policy included debatable requirements like data localisation, an audit of foreign companies’ source code, mandating RuPay on every e-commerce website, using Jan Dhan account transactions to create a creditworthiness profile of individual users, amongst others. The policy was eventually scrapped a month later.