Not A New Tax, DGT Collaborate With Marketplaces to Simplify Online Merchants Tax Mechanism

By: (Olin Silvia Hutahaean), the Directorate General of Taxes employee

A new chapter in Indonesia's digital tax administration has begun. Since July 1, 2026, a regulation governing how income tax is collected from online merchants on e-commerce platforms has officially taken effect. Four major marketplaces, namely Tokopedia, Shopee, Lazada and Blibli, have been appointed by the Directorate General of Taxes (DGT) to collect Income Tax Article 22 on transactions made by domestic merchants on their platforms.

The appointment follows The Regulation of The Ministry of Finance Number 37 of 2025 on the Appointment of Other Parties as The Income Tax Collectors and The Procedures for Collecting, Remitting, and Reporting The Income Tax Collected on Income Received by Domestic Merchants through Electronic Trading Systems. Signed by the Minister of Finance, Sri Mulyani Indrawati, on June 11, 2025, the regulation provides the legal basis for electronic trading operators to collect tax on behalf of the state.

The actual collection will begin on August 1, 2026, even though the regulation took effect at the beginning of July. The one-month gap gives the marketplaces time to adjust their systems, to test their business processes, and to inform the sellers, reflecting a measured rollout by the DGT.

Not a New Tax

The Director General of Taxes, Bimo Wijayanto, has emphasized that the policy does not impose any new tax burden on digital businesses. The change is the party who collects the owed tax. In the prior regulation, the online merchants calculated and remitted their own tax obligations, while in the current regulation, the marketplaces will now automatically withhold the tax at the point of each transaction, before the funds reach the seller's account.

This shift keeps the system in step with how public transaction patterns have moved toward digital channels. The four marketplaces were chosen after the government assessed each platform's system readiness, transaction volume, administrative capacity, and escrow account management. It reflects the DGT's thorough approach to the rollout.

The platforms have to meet specific criteria to qualify as mandatory tax collectors. Article 3 requires operators to use an escrow account and to record the transaction values or visitor numbers exceeding thresholds set by the DGT within a 12-month period.

An 0.5 Percent Rate

A rate of 0.5 percent of gross turnover as stated in the billing document does not include value-added tax and luxury goods sales tax. The tax is not due when the goods are shipped. Instead, it is due once the payment is received by the marketplace.

This Article 22 tax is not an additional levy on top of existing obligations. For merchants under the standard rates, the amount withheld can be credited against tax payable for the year. For those under the final income tax for small businesses, the collection counts toward settling that final tax, with any shortfall paid independently by the merchant.

Marketplaces will issue electronic billing documents integrated with the DGT's system as a proof of collection, simplifying the compliance for sellers. These documents are treated as equivalent to an official Article 22 tax collection receipt, so merchants no longer need to arrange the withholding slips manually.

Relief for Small Sellers

Small-scale sellers have been given clear relief under the new rule. Individual taxpayers with the annual gross turnover of up to Rp500 million (US$30,700) are exempt from the collection, provided they submit a statement letter to the marketplace using the format set out in the regulation's appendix. The statement must be renewed every tax year and replaced once turnover exceeds the threshold.

Several other categories are also exempted, including ride hailing delivery partners, merchants holding a withholding exemption certificate, sellers of mobile credit and SIM cards, certain gold and gemstone transactions by licensed businesses, and land and building rights transfers. These transactions remain taxable according to the applicable regulations.

Warm Welcome to Support

Businesses have welcomed the preparation time built into the rollout. Indonesian E-Commerce Association (idEA) chairman, Budi Primawan, said the one-month period allows sellers to prepare their systems, to run the tests, and to receive clear communication before the collection begins in early August. The association and marketplaces plan to roll out FAQs referred to the DGT’s and to support services for sellers.

The policy has also been described as a step toward fairer competition in retail. Siddhi Widyaprathama, who chairs the banking and financial services tax committee at the Indonesian Employers Association (Apindo), said it could level the playing field between the online and offline merchants while easing administrative burdens through automatic withholding. He also expressed a confidence that the government would keep supporting the transition through an outreach and a stable digital system.

Online merchants are now encouraged to review their tax status closely, from turnover thresholds to the documents required by marketplaces, ahead of the August 1, 2026 deadline, when collection officially begins.*

*)This article represents the personal opinion of the author and does not reflect the official stance of the institution where the author works.

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