JAKARTA: Indonesia plans to crack down on merchants peddling their goods on social media in a tax strategy that could see the republic reap as much as US$1.2 billion in revenue, Bloomberg.com reports.
The new taxes will include levies on endorsement deals signed by social media stars who are paid to advertise selected products.
Bloomberg quoted Indonesia’s Tax Revenue and Compliance Director Yon Arsal as saying that online deals and endorsements were all subject to taxation if there was “income to report”.
“We’re in discussions to decide how to enforce this in the most effective way and whether we will set different rates for this type of business,” he said. The strategy is part of President Joko Widow’s efforts to boost revenue to help finance billions of dollars in infrastructure projects.
According to Bloomberg, social media has emerged as an active marketplace in Indonesia with vendors offering goods ranging from luxury items like branded handbags to homemade dog biscuits, without the income being declared.
“The tax office seeks to earn 10 trillion rupiah to 15 trillion rupiah each year by enforcing value-added and income taxes on these merchants,” the business portal reported.
Malaysia may be following suit. Last May, Putrajaya said it was looking into the possibility of taxing online businesses beginning next year. Treasury Secretary-General Mohd Irwan Serigar Abdullah said the ministry had asked the Inland Revenue Board (IRB) to conduct a thorough evaluation of the matter.
He said the IRB would work with the Companies Commission of Malaysia in carrying out the evaluation. The idea was met with derision by netizens who said it would burden the people.
