Corporate Highlights – October 2025

Indonesia Appoints E-commerce Platforms as Income Tax Collection Agent

Indonesia has taken another step toward strengthening its tax collection ecosystem by appointing leading e-commerce platforms—including Shopee, Tokopedia, Bukalapak, Lazada, Blibli, and TikTok Shop—as income tax collection agents. This development follows the enactment of Minister of Finance Regulation No. 37 of 2025 (“MOFR 37/2025”), effective 14 July 2025, which designates certain e-commerce marketplace operators as collectors of Article 22 Income Tax (“PPh22”) on behalf of the Directorate General of Taxes (“DGT”).

Key highlights

Under MOFR 37/2025, e-commerce platforms appointed by the DGT are required to withhold, remit, and report PPh22 at a rate of 0.5% of the gross transaction value (excluding VAT and certain exempt transactions) from domestic sellers whose annual turnover exceeds IDR 500 million (approx. USD 30,100).

Importantly, the regulation applies not only to Indonesian-based operators, but also to foreign e-commerce operators hosting domestic sellers that meet the DGT’s specified criteria.

In principle, the government intends to provide a level playing field between brick-and-mortar merchants with online-based merchants. The government remains mindful of the small and micro business by setting the threshold of IDR 500 million (approx. USD 30,100) gross annual turnover for a merchant to be considered as “domestic seller” and subjected to the tax requirement. 

To support implementation, the DGT issued Regulation No. PER-15/PJ/2025 (“DGT Reg 15/2025”) in August 2025, which sets the thresholds for appointment based on transaction value and user traffic.

Detailed overview

1. E-commerce platforms may be appointed as Pph22 collectors if they meet one or more of the following criteria:
   • Transaction volume: the transaction value from Indonesian consumers exceeding (i) IDR 600 million (approx. USD 36,000) in 12 months, or (ii) IDR 50 million (approx. USD 3,000) per month; and/or
   • User base: more than 12,000 Indonesian users in 12 months or 1,000 per month.
2. Who could be considered as domestic sellers:
   • Includes shipping or courier service companies, insurance companies and other parties that conclude transactions with the buyers of goods and/or services on the e-commerce platform. 
   • The fact that the buyers of the goods/services could be overseas is not relevant in determining if a seller is considered as domestic seller.
   • Seller who uses any of the following:
     1. Indonesian bank account to receive their income; 
     2. transactions were concluded using IP (internet protocol) with Indonesia origin;
     3. mobile number with Indonesia country code.
3. Domestic sellers also required to issue invoices to their buyers using the e-commerce platform. The invoice must contain at least the following information:
   • Invoice number and date
   • Name of the appointed e-commerce marketplace. 
   • Account name of the domestic seller
   • Identity of the buyer
   • Type of goods and/or services, selling price and discount 
   • Pph22 payable by the domestic seller.
4. For the purpose of tax reporting by the e-commerce platforms, the domestic sellers must provide the following documents to the e-commerce platform:
   • Tax identification number and national identity number. 
   • Correspondence address. 
   • Statement letter using the format prescribed by MOFR 37/2025 to certify income and represent compliance to MOFR 37/2025.
   • Where available, certificate of exemption from withholding tax.
5. Further, the e-commerce platforms are expected to operate escrow accounts for the amounts collected on behalf of the domestic sellers.
6. The PPh22 withheld by the e-commerce platform can be credited against the Pph22 liability of domestic sellers. It’s worth noting that the e-commerce platforms remain obligated to collect, remit, and report the withheld tax even if the domestic sellers fail to provide the required documents and information to the e-commerce platform. 
7. Non-compliance may subject platforms to the same administrative sanctions applicable to domestic sellers under Indonesia’s income tax regime.
8. The Pph22 should not be collected by the platform for the following transactions:
   • Where the domestic seller’s gross turnover below the threshold. 
   • The provision of shipping or courier services by a domestic taxpayer acting as a partner of the platform in providing last-mile shipping. 
   • Where the domestic seller submits tax exemption certificate. 
   • The sale of pre-paid phone credit and starter packs. 
   • Sales of gold related products. 
   • Transfer of rights to land and/or buildings.

Impact overview and actions required

1. Businesses should consider whether they would be captured under MOFR 37/2025 and DGT Reg 15/2025.
2. For merchants and in-house tax teams, impact assessment is crucial to determine whether the business qualifies as a “domestic seller” under the new framework and whether transaction structures or compliance processes require adjustment.
3. E-commerce platform potential specific impact:
   • System enhancements to manage domestic sellers/merchants tax document. 
   • Enhanced KYC on domestic sellers to verify sellers’ tax and identity information. It is worth noting that this might pose a challenge to e-commerce platforms that typically prioritise frictionless onboarding of merchants. 
   • Transaction-level monitoring to ensure accurate identification of buyers. 
   • Integration of withholding, remittance, and reporting mechanism within the platform’s existing payment ecosystem.

Closing note

The appointment of e-commerce platforms as income tax collection agents represents a significant evolution in Indonesia’s digital economy tax policy—aligning with global efforts to improve tax transparency and capture revenue from online commerce. Businesses operating in or through Indonesia should closely monitor enforcement developments, ensure readiness of their compliance infrastructure, and engage early with appointed platforms to align tax reporting and documentation practices.

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Read our previous article about BPOM Regulation in Indonesia here

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