Indonesia has introduced a new law that will affect tourists who buy goods online from overseas sellers. The new law, which took effect on January 1, 2024, requires tourists to pay a 10 per cent sales tax on low value goods (LVG) that are shipped from abroad to Indonesia. The new law aims to protect local producers and consumers, and to increase the government’s revenue.
Low value goods are goods that are priced below 500,000 rupiah (about $35) each, excluding shipping and insurance costs. These goods include clothing, accessories, cosmetics, books, electronics, and other items that are commonly bought online by tourists and locals alike².
Under the new law, tourists who buy LVG online from overseas sellers have to pay a 10 per cent sales tax on the value of the goods, plus the shipping and insurance costs. The tax is collected by the customs authorities when the goods arrive in Indonesia, and the tourists have to pay the tax before they can receive their goods.
The tax applies to all LVG, regardless of the origin, destination, or quantity of the goods. However, there are some exemptions and exceptions, such as:
The new law is introduced to address the issue of tax evasion and unfair competition by overseas sellers, who can offer lower prices and avoid paying taxes on their goods. The new law is also intended to support the development of the local e-commerce industry, which is expected to grow rapidly in the coming years, and to create more jobs and income opportunities for Indonesians.
The new law is expected to have positive impacts, such as:
The new law, however, could also have negative impacts, such as:
The new law, therefore, is a significant and important policy that affects the online shopping behavior and experience of the tourists and the locals, and that has implications for the economy and the society of Indonesia. The new law, therefore, should be communicated and explained clearly and effectively to the tourists and the locals, and should be monitored and evaluated regularly, and be adjusted and improved accordingly, to ensure that it achieves its objectives and benefits, and minimizes its costs and harms, for all parties involved.
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