Indonesia is preparing to enforce a new rule mandating e-commerce platforms to withhold taxes on their sellers’ sales income.

This policy aims to increase government revenue and create fair competition with physical stores.

The regulation could be announced as early as next month, according to sources familiar with the matter.

Major E-Commerce Players Impacted by New Tax Collection Duties

The directive will affect leading platforms such as TikTok Shop, Tokopedia, Shopee, Lazada, Blibli, and Bukalapak.

These companies will be required to withhold 0.5% tax on sellers’ sales income, specifically targeting small and medium-sized enterprises with annual turnovers between 500 million and 4.8 billion rupiah.

Indonesia’s E-Commerce Association Supports Policy With Cautions

The Indonesian E-Commerce Association (idEA) has expressed support for the government’s tax collection plan but urges careful and gradual implementation.

idEA Secretary General Budi Primawan told Kontan.co.id that the association is ready to comply with the policy and to promote a healthy, sustainable e-commerce ecosystem.

He added that official regulations on marketplace tax withholding have yet to be issued.

Budi noted that the Directorate General of Taxes (DJP) has started limited socialization of the policy with some marketplaces as part of the preparation process.

Budi emphasized that this policy will directly affect millions of sellers, especially digital micro, small, and medium enterprises (MSMEs).

He highlighted the need for system readiness, technical support, and adequate communication to sellers.

“We are ready to cooperate with DJP in supporting fair and transparent tax policies and promoting national compliance without hindering growth opportunities for MSMEs, which are the backbone of Indonesia’s digital economy,” he said.

idEA encourages a phased implementation considering MSME preparedness, infrastructure readiness on both platform and government sides, and broad, comprehensive socialization.

Tax Office Explains Aim to Level the Playing Field and Simplify Administration

According to Tirto.id, Director of Public Information and Relations at the Directorate General of Taxes (DJP), Rosmauli, said the tax rule aims to create fair treatment between online and offline MSMEs. The policy is also intended to simplify the existing tax administration.

“The main principle is to simplify tax administration and create fair treatment between online and offline MSMEs,” Rosmauli explained.

However, the tax authority is still finalizing the regulation and has yet to provide detailed explanations about the mechanisms for withholding taxes on online MSMEs.

“Once the regulation is officially issued, we will provide full and open information,” Rosmauli promised.

Industry Concerns and Historical Challenges with Similar Policies

The e-commerce industry opposes the new rule, arguing it may increase administrative costs and drive sellers away from online marketplaces.

Platforms worry about managing the large volume of data, especially after recent system upgrades have caused technical difficulties.

Indonesia introduced a similar regulation in late 2018, which required marketplaces to share seller data and enforce tax payments.

However, it was withdrawn three months later due to strong industry backlash.

Despite this, Indonesia’s finance ministry faces an 11.4% decline in revenue between January and May 2025 amid weak commodity prices and economic slowdown.

The government hopes the new tax collection will help increase revenues.

Indonesia’s Booming E-Commerce Market Faces New Tax Rules

Indonesia’s e-commerce sector is rapidly growing, with gross merchandise value projected to rise from $65 billion in 2024 to $150 billion by 2030.

The government’s move to require tax collection from online sellers aims to align tax compliance with the sector’s expansion.

PHOTO: FREEPIK

This article was created with AI assistance.