Stakeholder Analysis on Indonesian E-Commerce Taxation

Amelia Setiawan; Sylvia Fettry Elvira Maratno; Puji Astuti Rahayu; Monica Paramita Ratna Putri Dewanti Accounting Department, Faculty of Economics, Parahyangan Catholic University, Gedung 9, Jl. Ciumbuleuit 94, Bandung 40141, Indonesia S A R I P A T I Vol. 12 | No. 3 ISSN: 2089-6271 | e-ISSN: 2338-4565 | https://doi.org/10.21632/irjbs

The growth of Indonesian online trading activities is predicted to be extremely high because of the huge number of internet users in Indonesia. This is perceived as a great chance to enter the online commercial trading market. The online marketplace makes it easy to buy and sell goods and services efficiently. However, there is little consideration on the taxation aspect of e-commerce transaction in Indonesia. This study analyzed Indonesian e-commerce taxation based on main group of stakeholders. The literature review is conducted to get comprehensive understanding on common e-commerce taxation. The analysis of e-commerce taxation grasps the comparison of practices between developed and developing countries. In order to get more depth understanding in Indonesian e-commerce taxation, questionnaires distributed to main group of stakeholders. The result has shown that the regulation applied for e-commerce transaction is considered sufficient. However, improvement on the e-commerce tax compliance of related parties must be enforced.

INTRODUCTION
Digitalization in various fields affect many industries significantly, including trade industry. Currently, online trading activities have been carried out by almost all countries in the world. In Indonesia, internet users are more than fifty per cent of the population or equivalent to 143.26 million people (Nainggolan, 2018). This abundant internet users, make the huge opportunity to buy and sell online in Indonesia. It is predicted that in the near future, e-commerce will become economic backbone of Indonesia (RI, 2018). This huge number of transaction will have significant effect on tax regulation. Even though the Indonesian regulation for e-commerce taxation had been already published in 2013, but until 2018 there is no official implementation guide of e-commerce tax. If the implementation guide of e-commerce implementation is issued, it will influence many parties in Indonesia. In order to identify parties will be affected by this implementation guide of e-commerce implementation, a stakeholder's analysis must be conducted. Stakeholder analysis is the process of collecting and analyzing quantitative data systematically to determine the stakeholders who will be affected by the new policies.
This study is discussed about stakeholder analysis on e-commerce taxation, in first section discuss about related phenomena with e-commerce tax in Indonesia which triggers this study. This paper is structured as follows. The next section outlines the necessary theoretical background of this study. The third section deals with research methodology of this study, and the forth section focus on the result and discussion of the findings The final section formulates conclusion and practical implications, major limitations and suggestion for further research.

LITERATURE REVIEW
E-commerce is the process of developing, marketing, selling, shipping, service and paying online for products and services transacted through interconnected networks for customers from global markets with the support of business partners from networks around the world (O'Brien & Marakas, 2011, p. 350).
The emergence of e-commerce technology has fundamentally changed the structure and business environment, as well as competition, and interaction among business people (Sumanjeet, 2010), (O'Brien & Marakas, 2011). As for the effectiveness of e-commerce taxation deployment in small firms in U.S., the main parts of an e-commerce infrastructures included: (1) flow of information, (2) organizational image, (3) reaction to customer needs, (4) increase sales, and (5) access to new markets (Bharadwaj & Soni, 2007).

E-commerce and Taxation
Increasing e-commerce transactions must be followed by the development of various policies to regulate them, especially the related taxation.
However, international guidance published by the Organization for Economic Co-operation and Development (OECD) reveal the complexity of regulating on e-commerce taxation (Spencer, 2014). One of the problems related to taxation for e-commerce is the imposition of vary taxes among countries on similar borderless global transaction.
Regardless of the complexity, taxing e-commerce is merely an evolution of business practices, the main difference of traditional and e-commerce are no local presence, intangible and services, speed and payments (Pinto, Alternatives for Taxing E-Commerce, 2005).
To have better understanding of the e-commerce taxation implementation compares to Indonesia, in this study, the implementation of the regulation is divided into three classification of countries: developed countries, developing countries and Indonesia (United Nations, 2018). Countries chosen as samples in this study are based on convenience sampling that is based on previous study available. OECD (1998) stated that same taxation principles should be imposed to both cyber and conventional business. So, in OECD countries, there is identical principle of e-commerce taxation. The existed problem was multinational residence of the transaction and the transfer pricing. One solution that emerges for taxation problems for e-commerce is to implement ''bit-tax'', namely the imposition of excise or tax based on the flow of information through digital networks or binary digits (Spencer, 2014). Thus, based on the literature review described above, the first research question formulated in this study is to examine the application of taxation for e-commerce transactions in developed countries. India has high information technology capabilities.

E-commerce Taxation in Developing Countries
India, as a developing country, began to regulate IT regulation with the IT Act 2000. However, there are still weaknesses in the regulation, including related e-taxation (Sumanjeet, 2010).
Meanwhile, as one of the 25 largest stock exchange in the world, South Africa were chosen as sample to have representative from Africa. It has been forecast that value added tax (VAT) in South Africa, as a significant contributor, will contribute more than 25.4 per cent to total tax revenue of that country.
As growing virtual world economies, what action that this country taken to regulate their taxation regulation is one of the topic in this study.
In Sri Lanka, small-and medium-sized enterprises (SMEs) play a crucial role in their economy. In this digital era, as all type of businesses, SMEs can benefit from new e-commerce technology.
However, in Sri Lanka, consumers are reluctant to adopt this technology due to security trust (Peiris, Kulkarni, & Mawatha, 2015).
Russian Federation has dynamic development of cross-border e-commerce segment. That segment is based, primarily, on growth of the audience of Internet users in Russia (Beloborodova & Martynova, 2016).
Thus, based on the literature review described above, the second research question formulated in this study is to examine the application of taxation for e-commerce transactions in developing countries.

E-commerce Taxation in Indonesia
In 2013

Indonesia
Stakeholders are parties who are affected by an activity or party who can influence the impact of an activity (Blackman, 2003). Stakeholder analysis is a useful tool for identifier stakeholders and describing their respective ways of life, roles and interests.
Stakeholder analysis should be carried out as soon as possible after e-commerce tax regulation had been made to ensure that all needs of stakeholders are handled appropriately.
Stakeholder analysis must concern various important matters (International Finance Corporation, 2007), i.e.: (1) Determine who is affected by a policy; (2) Determine related interests; (3) Determine stakeholders; (4) Determine priority stakeholders; (5) Collecting past information from relevant stakeholders; (6) Developing socio-economic fact sheets; (7) Determine the representation of stakeholders; (8) Engage with stakeholders; (9) Making sure that the government has been identified as a stakeholder; (10) Cooperation with interested organizations; and (11) Emphasize that employees are one of the good communication channels.
In this study, the stakeholder analysis is used the collection technique. This stakeholder analysis will result input for the regulator. Thus, based on the literature review described above, the fourth research question formulated in this study is to examine the application of stakeholder analysis for e-commerce transactions in Indonesia.

RESULT AND DISCUSSION
As the literature study taken, in this section, each of the research question are discussed to examine the application of taxation for e-commerce transactions in developed countries, developing countries and in Indonesia. The last sub-section in this section will discuss about the application of stakeholder analysis for e-commerce transactions in Indonesia.

Developed Countries
The application of e-commerce taxation has been widely applied in various developed countries. One and domestic and international contracts law (Blythe, 2012).
In New Zealand, the new regulation that was associated with e-commerce taxation law is goods and services tas (GST) rules. The new GST rules are a significant change and will affect many businesses and consumers and all the actors of the business will be impacted by the new rules and need to manage their plan (Stanley-Smith & Schwanke, 2015).
In Europe (EU), since the e-commerce tax was formally agreed in 2002, the key effects were already amended as follow: (1) non-EU organizations accounted for VAT, (2) EU organizations accounted for VAT using the reverse charge mechanism, (3) EU organizations exported outside the EU were not accounted for VAT, and (4) EU organizations supplying to non-business organizations accounted for VAT at the rate due in their own member state (Sinyor, 2002). Different concern derived from study about stakeholders' salience that found that accounting bodies, academics and business representatives should communicate effectively and constructively with the public structures with respect to enforcement of accounting regulations and the type of organizations involved (Deaconu & Cuzdriorean, 2016).
In developed countries, the main issue of the e-commerce tax is multinational transaction and transfer pricing; allocating taxing rights between source countries and other countries including residence countries (Spencer, 2014).

Developing Countries
India has already implemented e-commerce taxation since 2008. It was found that the Indian regulation were outdated and weak enforced, so Indian government should provide safe and secure business environment on cyberspace and strong legal framework and should introduce separate laws for e-commerce in India (Sumanjeet, 2010).
It was also recommended that India should look into the Indian tax structure and try to reform to implement the fair tax policy (Gupta, 2015).
The current South Africa's VAT Act was issued in 1991 (Johnston & Pienaar, 2013). In that era, digital transaction was not established yet, so, in this study, the content of the Act was examined to determine the compatibility with current complex transaction of digital world. Even though the regulation were issued in 1991, but the implementation guide was already adjusting the application of that regulation such as adjustment of tax subject that included digital product. However, the taxation systems are still relying on honesty of the tax payer in reporting the product and found the difficulties in the enforcement (Johnston & Pienaar, 2013).
The weakness of South Africa's VAT Act was not specific regarding the place of supply of transactions occurring in virtual worlds and the definition of goods should also be amended to include digitized products (Johnston & Pienaar, 2013).
In Sri Lanka, adoption rates of e-commerce in are so low. One reason for consumer reluctance is their concern about security risks (Peiris, Kulkarni, & Mawatha, 2015). In accordance with low adoption of customer trust in e-commerce in Sri Lanka, the recommendation is tax holiday for e-commerce/ tech related business that makes heavy investments into growth (Sirimanna, 2017). It's assumed that tax holiday decision will encourage customer trust and adoption of e-commerce transaction in Sri Lanka.
In the long range, the regulator can apply VAT that covers e-commerce transaction.
In Russia, cross-border e-commerce segment have a number of competitive advantages such as: zero taxation, a wide range of goods, low cost of goods compared to local vendors, and increasing the speed of delivery from abroad (Beloborodova & Martynova, 2016).
In developing countries, the result was recommending zero tax for e-Commerce transaction and the regulators should look further on the existing rules and make the necessary adjustment.

Implementation of E-Commerce Taxation in
Indonesia E-commerce taxation have been implemented by some larger business player, such as jd.id, Zalora and Mataharimall. But for smaller businesses or those who use social media platforms, tax collection has not yet been implemented. This is due to a lack of awareness of tax imposition for e-commerce. In this study, the online business

Stakeholders Analysis
The first stage in stakeholder analysis is to determine who is affected by the e-commerce tax regulation. In this case, the parties are affected: (1) international; (2) national / politics -regulator; (3) national / political -tax collector; (4) national / politicsfinance minister; (5) commercial / private sector -seller; (6) non-profit organizations; (7) community, and (8) consumers. The second stage in stakeholder analysis is determining the relevant interests. Based on the parties identified from the first stage, an analysis of interests related to e-commerce laws is carried out as can be seen in Table 1.
Stakeholder grouping is carried out by adopting the criteria set before which is adopted from Quezada Based on the attributes above, stakeholders are grouped as in Table 2.

Interested Parties
Interest in e-commerce taxation

International
Cross border transactions National/politic -regulator (Directorate General of Taxation) Implementation guide about e-commerce taxation National/politic - Tax   would not continue their business, while 82% would still do business. Those who will not continue to do business reason that tax imposition will further reduce the profit that will make this business no longer profitable.

Buyer/Consumers
The location of respondents is in Java, Kalimantan  x x x Source: (Quezada, 2012) Law for e-Commerce, 61% said they would not buy online again, while 39% would still shop online.
Those who will not buy online again argue that tax imposition will increase prices and shop online becomes unattractive.

National/politic -Regulator
In this study, respondents that include in regulator role are people who work in area of taxation including people work in the government, academicians with expertise in taxation and tax consultants. These three subjects are chosen as represent "national/politic -regulator" stake holder due to their expertise in e-Commerce taxation. The information collected from these respondent is: (1) what is the obstacles in implementing e-commerce tax, (2) (Hutchens, 2015).

MANAGERIAL IMPLICATION
Managerial Implication of this study can be grouped into three groups: 1. Commercial/ Private Sector; 2.
Managerial Implication for Commercial/ Private Sector-Regulators are: 1. The regulator should maintain the taxing regime as simple as possible as supported by previous research in US (Hutchens, 2015). Similar result recommend the regulators to back to basic and using existing tax collection practices to increase tax compliance (Taylor, 2013).
2. Applying same tax rules for traditional and e-Commerce transaction as supported by previous research in US (Allen, 2013) 3. Cross border transaction will affect the amount of tax that should be paid due to the percentage of revenue regulated. The regulators should manage this problems as that has been experienced by US that has many states with different tax jurisdiction (Aquilio, 2016) 4 2. To attain tolerable levels of operational comfort, security, and predictability, more established businesses can even become eager to help governments financially by paying taxes (Pastukhov, 2010).
Managerial Implication for Buyer/Consumers are as follow: as the Internet industry matures, tax compliance online common practices, and it is expected that a willful act of a taxpayer who sees herself as a government's partner in preserving law and order in the on-and offline worlds will arise as supported by previous research (Pastukhov, 2010). Taxation on conventional and cyber business must be equal. Whatever the type of business, commerce transaction will be subject to the same treatment.

CONCLUSIONS
The limitation of this study is inability to generalize the result. Given the qualitative nature of this study, generalization is not possible. Future research that involves more representative respondents and more representative e-commerce companies can be done to create more applicable result. More representative respondents can be obtained by interviewing the regulators directly and collecting more data from each stakeholders.