The activity of buying and selling products through online services or internet has increased rapidly globally, including Indonesia. More individual and companies (“Businesses”) have started to sell their products via online shop and forcing offline players change their business models, especially during the Pandemic situation.
The Indonesian Government has issued Government Regulation (GR) no 80/2019 related to Trading through Electronic Systems, followed by Implementing Regulation no 50/2020 issued by the Ministry of Trade
There are 3 basic E-commerce formation that both local and foreign businesses can register, which are :
Merchants can sell goods and or services through electronic systems or e-commerce operator organizer . Merchants must obtain a business license from Online Single Submission (OSS) Agency with Business Classification Code (KBLI) 4791 under Retail Trading through Media Courier and Internet (Perdagangan Eceran Melalui Pemesanan Pos dan Internet ) . This KBLI is also open 100% for foreign investment
- E-commerce providers (Penyelenggara Perdagangan melalui sistem eletronik (PPMSE))
The Businesses who provides electronic system to facilitate e-commerce transactions such as : online streaming platforms, marketplaces, online advertisements, price comparison platforms, and any deals providers are classified as E-commerce providers ; the KBLI code is 6312 under web portal that is open with maximum 49% for foreign investment for investment below IDR 100 billion. PPMSEs should obtain e-Commerce Trade Business License ( SIUPMSE) from the Ministry of Trade through OSS .
PPMSEs should have some general requirements such as :
- Prioritize the use of Indonesian domain name (eg: id)
- Use server equipment housed in data center
- Register the electronic system to Ministry of Communication and Informatics
- Report to Statistic Bureau periodically
E-commerce providers are also responsible for the negative content on their platforms that should also be closely monitored.
Some PPMSE in Indonesia are : Tokopedia, Lazada, Shopee, Telunjuk, Fave etc
Foreign businesses that are actively selling online goods from offshore to consumers in Indonesia , and satisfy the applicable thresholds will be subject to the Regulation
Foreign PPSMEs are obligated to establish a representative office in Indonesia if :
- Have completed over 1,000 transactions with Indonesian consumers within a year; or
- Have delivered over 1,000 packages to Indonesian consumers with a year.
The PPSME will need to establish a specific type of representative office representative office for a foreign trading company (KP3A).
To establish a KP3A, the company will first need to obtain a Foreign Company Trade Representative license (SIUP3A), which can be done through the OSS system.
- Intermediary Service Providers (Penyelenggara Sarana Perantara (PSP))
The Businesses who facilitate the transactions from electronic communications between user/sender and recipients are categorized as Intermediary Service Providers. This is applied to search engine providers, hosting providers, caching and payment gateway providers.
PSP should also obtain SIUPMSE as the business license unless:
-it is not a direct beneficiary of the e-commerce transactions or
-is not directly involved in the contractual relationship between the parties conducting e-commerce transactions.
Some PSP in Indonesia are: Google, Yahoo, Godaddy, Xendit, Midtrans etc
GR 80/2019 treats Businesses to be responsible for Personal Data Protection, the standards referred to European Union’s General Data Protection Regulation and the APEC Privacy Frameworks. Under this regulation, personal data are not allowed to be transfer offshore, unless under approval from the Ministry of Trade.
To run the e-commerce business in Indonesia, foreign businesses should comply with Indonesian tax regulation as stated in PMK 210/PMK.010/2018 for transactions through electronic system. Merchants, PPMSE, PSP and other e-commerce businesses other than marketplace platform has to comply with the tax regulation such as:
- Having tax ID (NPWP) and or VAT taxpayer (PKP) – for certain category
- Collect, pay and report VAT and Withholding taxes
- Prepare recapitulation reports of platform users
More information related to incorporation and compliance post establishment please contact email@example.com