DGT Says TikTok Deposits Non-E-Commerce Advertising Tax

The Directorate General of Taxes (DGT) of the Ministry of Finance stated that the social media platform TikTok deposited taxes to the state as a value added tax collector (VAT) for trade through electronic systems (PMSE).

"TikTok is registered as one of the PMSE VAT collections. So, TikTok has paid taxes on VAT collection activities for transactions in Indonesia," said Director of Potential, Compliance, and Acceptance of the Directorate General of Taxes (DJP) of the Ministry of Finance, Ihsan Priyawigawa, quoting Antara, Wednesday, September 27.

In that context, TikTok collects taxes from users who use TikTok services, for example for advertising services. Thus, people who do business on the TikTok platform, both domestic and foreign, are both taxed.

Meanwhile, regarding TikTok's potential for e-commerce, Ihsan said he would still monitor future developments to determine the taxes imposed on the platform.

"The same treatment as others, whether he is a domestic or foreign taxpayer. So, we will first study the business model carried out by TikTok," he explained.

The government has banned social commerce platforms from facilitating trade through the revision of Trade Minister Regulation Number 50 of 2020. The regulation regulates that platforms can only promote goods and services, however, they cannot open transaction facilities.

Previously, President Joko Widodo (Jokowi) said the impact of e-commerce, one of which was on the short video hosting service platform TikTok, had made sales and production in the scope of micro, small and medium enterprises (SMEs) to the conventional market plummeted.

Jokowi assessed that the platform owned by the Chinese company should only act as social media and not economic media.

"It has an effect on MSMEs, on production in small businesses, micro businesses, and also on the market. In the market, some markets have started to decline due to attacks. Supposedly, this should be social media, not the media economy," Jokowi said after reviewing road infrastructure in North Penajam Paser Regency, East Kalimantan, Saturday (23/9/2023).