INDONESIA TAKES IMPORTANT REGULATIONS FOR FOREIGN E-COMMERCE GOODS

29/04/2022

At the end of December 2019, the Indonesian government announced a new threshold for import tax on consumer goods sold through e-commerce. Instead of the current threshold of $75, starting January 1, 2020, any product worth more than $3 (approximately RP 42,000) will have to pay import duty.

This is the second time the customs authority has lowered the threshold in just over a year. In October 2018, the minimum was changed from $100 to $75 per package. These actions are the government's efforts to prevent cheap foreign products from dominating the market, creating opportunities for domestic enterprises.

Data from customs shows that the number of international parcels has skyrocketed in 2019, from 6.1 million in 2017 and 19.6 million in 2018, to nearly 50 million packages when 2019 was not even close. end. The growth of Indonesia's e-commerce industry in recent years has allowed importers to exploit loopholes in the country's import regulations to avoid taxes. Due to the high tax threshold, sellers do not import goods in large quantities anymore. They built an online store to sell and ship individual packages to customers without paying any taxes.

As a result, the market was flooded with foreign goods; and most of them come from China at amazingly low prices. Especially for handbags, shoes, and fashion, many domestic manufacturers had to close down due to the inability to compete on price and the variety that foreign products provide.

Under the new regulations, foreign-made textiles, clothing, bags and shoes with a value of more than $3 will be subject to a tax rate of between 32.5% and 50% of the total value. For other categories, the tax rate is reduced compared to before. Instead of the current rate from 27.5% to 37.5%, e-commerce goods in general are only subject to 7.5% import tax, 10% value-added tax and 0% deductible income tax. Details can be found in the following table:

With this action, the price of foreign goods will be significantly higher, giving domestic goods a chance to survive this war. The Ministry of Finance will also monitor transaction data from e-commerce platforms such as Lazada, Blibli and Bukalapak to ensure transparency between sellers and the government, with pilot projects already underway.

With this action, the price of foreign goods will be significantly higher, giving domestic goods a chance to survive this war. The Ministry of Finance will also monitor transaction data from e-commerce platforms such as Lazada, Blibli and Bukalapak to ensure transparency between sellers and the government, with pilot projects already underway.