Regional Developments In E-Commerce Law In Southeast Asia.
Legal News & Analysis - Asia Pacific - Regulatory & Compliance
11 April, 2018
Recognised as the next significant market for e-commerce in the Asia-Pacific region, Southeast Asia presents notable growth potential. Research conducted by Google and Temasek has concluded that e-commerce sales reached US$10.9 billion in 2017 and are growing at a compound annual growth rate of 41 percent. Revelations such as this have spurred interesting developments in e-commerce legislation across the region.
The Myanmar government has, for example, recently announced its intent to enact the country’s first ever significant piece of e-commerce legislation. This new statute will be titled the E-Commerce Law (ECL).
Presently, Myanmar has several laws regulating electronic transactions, including the Computer Science Development Law 1996 (CSDL) and the Electronic Transactions Law 2004 (ETL). The ETL implements a media-neutral approach in regulating electronic contracts. The law caters to cyber offences and establishes the Electronic Transactions Control Board as the regulator, and the Central Body of Electronic Transactions to implement relevant legislation. The CSDL addresses internet access restrictions, governs the ability to publish information online and prohibits individuals from establishing access to online computer networks without obtaining approval from the Ministry of Transport and Communications.
The existing e-commerce framework (ETL and CSDL) is not sufficient, however, to regulate and keep up with Myanmar’s ever-growing e-commerce sector. The ECL will therefore endeavour to fill this void and better regulate the online trading of goods and services to protect consumers and help prevent fraudulent online transactions.
Separately, certain Southeast Asian governments are soon expected to introduce taxes on e-commerce sales. Such steps would align online and traditional retail more closely and reflect similar measures taken in other major global markets.
Singapore has recently announced that a new goods and services tax (GST) will be appointed on imported e-commerce services in 2020. For B2C services, this will be via an overseas vendor registration system.
Malaysia has announced that it is planning to implement 6 percent GST on services provided by foreign e-commerce companies that offer digital services in Malaysia.
Thailand is already undergoing a public hearing on a series of proposals relating to e-commerce. If such proposals are implemented, any company based overseas that provides services to a non-value added tax (VAT) registered person in Thailand would be obliged to pay VAT at 7 percent if such income is in excess of a specified threshold.
Indonesia has indicated that it will likely implement legislation later this year to require online operators in Indonesia that serve customers both domestically and internationally to be subject to Indonesian income tax on any economic benefit derived from their activities. Such operators will also be subject to VAT. The government is still considering whether to extend obligations to e-commerce service providers located in foreign countries that sell to those located within Indonesia.
The challenge will be to strike a balance between levelling the playing field for online versus brick and mortar businesses without stifling what is a burgeoning mode of sale and purchase. What is clear is that e-commerce is and will continue to be the new norm for sales across a variety of goods and services sectors. As e-commerce in Southeast Asia continues to evolve, so will the legislation that governs it.
For further information, please contact:
Babita Ambekar, Special Counsel, Duane Morris & Selvam