Stop any plan to tax online merchants: SME ministry official

The Jakarta Post – The Cooperatives and Small and Medium Enterprises Ministry has urged the Directorate General of Taxation to reevaluate its plan to tax social media users who promote their businesses online, as such a move will hamper small businesses.

Agus Muharram, the minister’s secretary, emphasized that many people who use social media for online businesses are young and creative individuals who need support from the government.

“They are creative young people. Don’t let regulations hinder their businesses,” he told reporters in Jakarta on Friday.

Instead of burdening them with tax, the government should give them incentives, such as providing access to capital to help them expand. “I hope that young people who still generate little revenue would be exempted from paying taxes,” Agus said.

On Wednesday, the tax office announced its plan to tax internet users who use their accounts to sell products or services via social media like Instagram, Facebook and Indonesia’s largest online forum Kaskus.

“Online marketplaces, daily deals, direct sales and all endorsers will be subjected to tax and if they receive income, it must be reported,” Yon Arsal, DJP’s tax compliance director said, as quoted by Kompas.

Yon said that the government could potentially earn about Rp 15.6 trillion (US$1.2 billion) if it is able to collect taxes from online transactions. (win/ags)