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Indonesia is preparing to roll out a new tax regulation that would require e-commerce platforms to collect and remit taxes on behalf of their sellers, in a move aimed at improving state revenue collection amid broader fiscal strain.
According to documents reviewed by Reuters and briefings with industry stakeholders, the new directive—expected to be announced as early as July—would obligate digital marketplaces such as TikTok Shop, Tokopedia, Shopee, Lazada, Blibli, and Bukalapak to withhold 0.5% tax on sales from small and medium-sized sellers earning between 500 million and 4.8 billion rupiah annually (~$31,000 to $300,000).
Revenue Challenges and Regulatory Gaps
Indonesia’s tax revenue has dropped 11.4% year-on-year in the January–May 2025 period, totaling 995.3 trillion rupiah (~$61 billion), as global commodity prices remain soft and economic growth slows. Disruptions to tax collection caused by a system upgrade earlier this year have further complicated matters.
With e-commerce forecast to grow from $65 billion to $150 billion by 2030, the government sees the digital sector as an under-tapped source of tax revenue. A similar attempt in 2018 to enforce tax compliance on sellers through platforms was scrapped within three months following strong industry pushback.
This time, authorities are focusing on withholding-at-source mechanisms to bypass challenges of fragmented seller compliance.
Industry Concerns: Administrative Burden and Data Infrastructure
E-commerce firms have raised red flags over:
- Administrative burdens and cost implications of acting as tax intermediaries.
- Seller attrition risk, with fears that small merchants may leave formal marketplaces for unregulated channels (e.g., direct social selling).
- Data infrastructure strain, especially following tax authority IT issues earlier this year.
The regulation would also include penalties for late reporting by platforms—intensifying the need for real-time compliance systems and scalable tax tech.
Global Parallels and Tax Policy Context
Indonesia’s move aligns with a broader global trend of shifting tax compliance onto digital intermediaries, including:
- DAC7 obligations in the EU (effective 2023) requiring platforms to report seller income.
- Section 6050W and 1099-K thresholds in the U.S., tightening digital payment and gig economy reporting.
For tax professionals and digital businesses, Indonesia’s case is another indicator of:
- The growing “platformization” of tax compliance.
- The need to integrate automated withholding and seller classification engines.
- Increased audit risks from misaligned seller thresholds or reporting errors.
Strategic Considerations for Multinationals
Companies operating or investing in Indonesia’s e-commerce ecosystem should prioritize:
- Tax control frameworks embedded within marketplace operations
- Legal and technology reviews to comply with withholding, reporting, and penalty structures
- Proactive seller education to retain merchants within compliant platforms
Indonesia’s finance ministry has not yet made public statements on the draft regulation, and industry groups, including the Indonesia E-commerce Association (idEA), are continuing negotiations in hopes of modifying or delaying its implementation.
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