JAKARTA: Indonesia will allow foreigners to own 100 percent stakes in local e-commerce business and pay a higher income tax rate, Information Minister Rudiantara said late on Thursday.
The moves comes among a slew of government revisions to its negative investment list in a bid to attract more investment into the country.
The booming e-commerce sector was previously closed to foreign investors, but overwhelming interest has persuaded the government to ease its stance. “The spirit is that the regulation would not be to0 tight,” Rudiantra said, as quoted by Metronews.com.
He added the government would limit foreign investment to large sized e-commerce business, without elaborating details of how size would be define.
Distinctions between e-commerce firms, businesses operating online marketplace platforms and vendors using online platforms to market products and services will be made to set different tax rates.
“For small and medium size business, we could charge them with final income tax rate of 1 percent [of their sales]. For foreigners or big business, we would the tax determine later,” he said. Typically, businesses in Indonesia pay 25 percent income tax on gross profits.
The total worth of the country’s e-commerce industry is expected to double to Rp 20 trillion ($1.4 billion) in 2016 from a year earlier, on the back of rising Internet and smartphone use, Indonesia’s E-Commerce Association (idEA) has predicted.
Homegrown e-commerce and market place operators — like Mataharimall.com, Lazada and Tokopedia — are still battling for marketshare in the mammoth, but fragmented, market in Indonesia. Still, US giant Amazon and Chinese rival Alibaba are yet to establish a presence in the country.
