Leveling the Playing Field: MoF Reg. 37/2025 Eases Concerns for All Merchants

Oleh: (Nani Susanti), pegawai Direktorat Jenderal Pajak

The Covid-19 pandemic in 2020 was a major disruptor that accelerated the adoption of technology in society. One sector with a rapid growth was electronic system commerce providers, more commonly known as marketplaces. This growth was driven by several factors, including population growth and the increasing use of smartphones, internet, and social media.

According to data from Bank Indonesia, the value of e-commerce transactions in Indonesia continues to rise sharply, from IDR205.5 trillion in 2019 to IDR 487.01 trillion in 2024. This significant increase is clear evidence of a massive shift in consumer behavior toward digital shopping.

However, beneath this euphoric growth, a sense of unease emerged among conventional merchants. They felt that the playing field was not level. While they faced physical operational costs, rent, and clear tax obligations, online sellers seemed to operate in a "grey area" that was difficult for the tax system to reach. This situation raised a fundamental question: why were merchants with physical stores transparently required to pay taxes, while many online transactions were untouched by the same regulations? This feeling of unfairness became a primary concern for the government.

Tax Equality for Online and Conventional Merchants

The government has recognized this challenge and responded by issuing Minister of Finance Regulation Number 37 of 2025 on The Appointment of Other Parties as Income Tax Collectors and The Procedures for Collection, Payment, and Reporting of Income Tax Collected by Other Parties on The Income of Domestic Traders through Electronic Trading Mechanisms (MoF Reg. 37/2025).

This regulation is a strategic step to create fairness and equality between digital and conventional economic players. The MoF Reg. 37/2025 appoints electronic system commerce providers (both domestic and foreign) as collectors of Income Tax Article 22 on transactions conducted by domestic merchants.

The implementation of this regulation is not an abrupt decision. It follows previous regulations – MoF Reg. 210/2018, MoF Reg. 48/2020, and MoF Reg. 60/2022 – which have now been revoked. The issuance of MoF Reg. 37/2025 represents an adaptive and well considered effort by the government to manage the digital economic boom and ensure all parties are treated equally.

A Fair and Convenient Mechanism

One of the most crucial points of MoF Reg. 37/2025 is its collection mechanism, designed to facilitate, not to burden. The Income Tax Article 22, set at 0.5% of gross revenue, will be collected directly by the marketplace itself. This is an efficient process that eliminates the administrative burden and risk of reporting errors for merchants, especially for MSME (micro, small, and medium enterprises) owners who are often unfamiliar with the tax system. This means merchants no longer have to worry about calculating their taxes, as all the work is handled by the electronic system commerce provider.

Furthermore, the regulation also pays close attention to the sustainability of MSMEs. There is a gross revenue limit of up to IDR500 million for individual taxpayers who are exempted from the collection. This provision ensures that smaller businesses are not burdened in the same way as the larger ones, giving MSMEs room to grow without undue pressure from tax obligations.

Answering the Concerns of Conventional Merchants

MoF Reg. 37/2025 is a key solution to the long-standing concerns of conventional merchants. The regulation explicitly ensures the following:

1. Equal Treatment: With this MoF Reg. 37/2025, the playing field for online and offline merchants becomes level. Both are now subject to the same tax obligations, eliminating the perception that online sellers can "escape" from paying taxes.
2. Legal Certainty: The existence of a clear and binding regulation provides legal certainty for all economic actors. Conventional merchants now know that their competitors are also guaranteed to fulfill their tax obligations.
3. Fair Contribution: Contributions to the state through taxes are now more evenly distributed, coming from merchants who sell in physical stores as well as those who operate in the digital world.

By issuing MoF Reg. 37/2025, the government is not only optimizing potential state revenue from the rapidly growing digital sector, but also sending a clear message to conventional merchants. Their concerns have been heard, and the tax system is designed to ensure the fairness for everyone. This regulation reflects the government's commitment to create a fair, healthy, and sustainable business ecosystem where all economic players, both digital and conventional, can grow and contribute together.

*)This article is author's opinion and does not reflect author's institution's point of view.

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