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Ecommerce

Governments ready to help traditional retailers in Southeast Asia

Monday 12 February 2018 | 11:24 AM CET

Southeast Asian governments are seeking to help traditional vendors in their fierce competition with online retailers such as Lazada and Amazon.com.

BMI Research expects Southeast Asian ecommerce to reach USD 64.8 billion in 2021 from USD 37.7 billion in 2017, while Credit Suisse Group estimates that online shopping growth could outpace that of traditional retailers by six to 10 times over the next few years. 

Singapore may unveil an ecommerce tax in February 2018, although online shoppers in Singapore are generally able to avoid levies on purchases that don’t exceed USD 300. The new budget is likely to contain a new tax on online vendors. Thailand, Indonesia, and Malaysia – where governments are funding ambitious infrastructure programmes – are also considering similar plans.

However, in Vietnam and the Philippines, online sellers have found ways to evade paying taxes – posting goods and services on social media, boosting cash transactions and running multiple sales websites.

Thailand’s Revenue Department expects a proposed e-business levy will triple annual tax revenue growth to 15%, according to a Bangkok Post report. The draft bill sets the ceiling rate at 15% and would apply to online vendors whose domain name is registered in Thailand and who have a payment system in baht or transfer money from within the country.

In Indonesia, the government will soon be issuing a new rule on ecommerce after consultations with ministries and agencies. In order to protect small- and medium-sized enterprises that supply much of the newly taxed vendors, the government is proposing a lower income tax for those merchants.

The Customs Department in Malaysia has been talking about plans around taxing foreign ecommerce players for months. BMI Research expects that Malaysia is going to inntroduce a 6% levy on the online providers.

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