Academia
A customer shops on the Tokopedia online market place on his mobile phone on May 4. (Antara/Puspa Perwitasari)
Starting Aug. 1, four of the country's largest marketplaces - Tokopedia, Shopee, Lazada and Blibli - will begin withholding income tax directly from qualifying merchants' sales, replacing the long-standing self-assessment system. By turning digital platforms into tax collectors, the government hopes to improve compliance. The challenge is whether it can formalize the digital economy without discouraging the small businesses that drive its growth.The reform is anchored in Finance Ministry Regulation (PMK) No. 37/2025, which establishes a new collection mechanism for Article 22 Income Tax (PPh Pasal 22) on domestic merchants selling through e-commerce platforms.
The regulation does not create a new tax or alter existing tax rates. Instead, it authorizes the Directorate General of Taxes (DJP) to appoint eligible marketplaces as withholding agents responsible for collecting, remitting and reporting taxes on behalf of merchants. Under the regulation, online sellers with annual turnover between Rp 500 million (US$28,500) and Rp 4.8 billion are subject to a final income tax of 0.5 percent.
