New E-commerce Tax Rule to Shift Seller Income Withholding to the Platforms
Indonesia is preparing a major ecommerce tax overhaul that will require online marketplaces to withhold and remit tax on behalf of their sellers.
The move aims to increase state revenue and align tax treatment between online platforms and traditional retailers. The regulation is expected to be announced as early as next month and will impact key players, including TikTok Shop, Shopee, Lazada, Tokopedia, Blibli, and Bukalapak.
Under the draft rule, platforms will need to withhold a 0.5% tax from sellers whose annual turnover ranges between 500 million and 4.8 billion rupiah. These small to medium-sized businesses are already subject to the tax, but currently handle payment themselves. The new mechanism shifts that responsibility to the platforms.
Revenue Pressure and Digital Growth
The reform is part of broader efforts to improve tax collection as revenue has fallen 11.4% year-on-year in the first five months of 2025. The dip is attributed to lower commodity prices, slower growth, and disruptions in the tax system upgrade.
Meanwhile, Indonesia’s digital economy is another area to consider, as it continues to boom. E-commerce alone reached a gross merchandise value of $65 billion in 2024, projected to reach $150 billion by 2030, according to a report by Google, Temasek, and Bain & Company. This is a significant achievement that cannot be overlooked.
With this ecommerce tax overhaul, authorities hope to tap into that growing market without placing the burden directly on sellers. However, operational challenges and the ability of tax systems to process vast seller data remain key concerns.
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