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Indonesia’s Ministry of Finance has officially implemented new regulations requiring e-commerce platforms to withhold and remit income tax on behalf of small and medium-sized sellers, in a significant move to strengthen compliance and reduce informal sector tax leakage.
0.5% Income Tax Withholding on Platform-Based Sales
Under the regulation, platforms must collect a 0.5% income tax on transactions made by sellers with an annual turnover between IDR 500 million and IDR 4.8 billion (approximately USD 30,800 to USD 296,000). This applies only to platforms that meet specific thresholds related to site traffic and total transaction value over the past 12 months.
The Ministry will formally notify qualifying platforms, which will then be obligated to start collecting and transferring the taxes to the Directorate General of Taxes (DGT). A one-month compliance window has been provided to allow platforms time to implement the required systems.
Obligation to Share Seller Data
In addition to tax collection, qualifying platforms must also share seller data with tax authorities to improve transparency and expand Indonesia’s taxable base.
The new rules are part of broader efforts to address the country’s large “shadow economy,” which includes unregistered and under-reported income sources, particularly in the fast-growing digital and informal sectors.
Industry Reaction and Concerns
The Indonesian E-Commerce Association (idEA) has confirmed that its members will comply, but voiced concern over the tight implementation timeline, particularly given the regulation’s potential impact on millions of online sellers.
Major e-commerce operators affected by this regulation include:
- TikTok Shop (ByteDance)
- Tokopedia (GoTo Group)
- Shopee (Sea Ltd.)
- Lazada (Alibaba Group)
- Blibli (PT Global Digital Niaga Tbk)
- Bukalapak
Indonesia’s e-commerce industry has seen explosive growth, with a gross merchandise value (GMV) of $65 billion in 2024, projected to reach $150 billion by 2030, according to a joint report by Google, Temasek, and Bain & Company.
Tax Analysis: Strengthening Withholding Regimes
From a tax policy perspective, the regulation represents a strategic extension of Indonesia’s self-assessment tax regime, shifting part of the compliance burden to e-commerce platforms. By mandating withholding at source, the Ministry aims to:
- Improve tax collection efficiency
- Reduce underreporting among SMEs
- Leverage platform infrastructure to enhance monitoring
Tax advisors and digital platform operators should closely examine the operational implications, including:
- System readiness to calculate and withhold taxes
- Data-sharing protocols
- Communication with sellers on net payouts and tax credits
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