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Indonesia to allow 100 percent foreign ownership in ecommerce

Friday 15 January 2016 | 02:03 PM CET

Indonesia will allow foreigners to own 100% stakes in domestic ecommerce business and pay a higher income tax rate, according to Information Minister Rudiantara, jakartaglobe.com reports.

The decision follows a series of government revisions to its negative investment list in a bid to attract more investment into the country. The booming ecommerce 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 too tight," Rudiantra said, as quoted by Metronews.com, the source cites. He added the government would limit foreign investment to large sized ecommerce business, without elaborating details of how size would be define.

Distinctions between ecommerce 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% [of their sales]. For foreigners or big business, we would the tax determine later," the source cites.

Typically, businesses in Indonesia pay 25% income tax on gross profits. The total worth of the country's ecommerce industry is expected to double to USD 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, the source cites.

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