Indonesia’s Finance Minister, Sri Mulyani, has announced new regulations requiring ecommerce platforms to act as tax collectors for income tax (PPh) under Article 22.

The Directorate General of Taxes (DJP) indicated that implementation will begin when the platforms are prepared.

Hestu Yoga Saksama, Director of Tax Regulation I at DJP, mentioned that the designation process is expected to start within one to two months.

Initially, the policy will focus on larger ecommerce platforms like Shopee, Tokopedia, Lazada, and Blibli.

These platforms will collect taxes from merchants using their services.

🔗 Source: Tempo

🧠 Food for thought

1️⃣ Indonesia follows global trend of marketplace tax collection to address e-commerce tax leakage

Indonesia’s move to appoint marketplaces as tax collectors aligns with a worldwide trend where governments are adapting tax systems to the digital economy.

E-commerce sales reached $6.3 trillion globally in 2023 and are projected to grow to $8.1 trillion by 2026, creating urgent pressure for tax authorities to capture this revenue stream 1.

Following the 2018 South Dakota v. Wayfair ruling in the US, many jurisdictions implemented “marketplace facilitator laws” requiring platforms to collect and remit taxes on behalf of sellers, similar to Indonesia’s approach with Shopee and Tokopedia 2.

This policy addresses a key challenge of digital commerce: without platform involvement, thousands of individual merchants would need to manage their own tax compliance, leading to significant revenue leakage and administrative burden.

The phased implementation starting with larger platforms (Shopee, Tokopedia, Lazada, and Blibli) allows for system testing before wider deployment, a strategy seen in other countries.

2️⃣ Digital tax integration represents larger modernization of revenue collection systems

Indonesia’s development of a specialized application for marketplace tax collection reflects a broader global shift toward digitalized tax administration.

Electronic tax systems significantly reduce compliance costs for both businesses and tax authorities by minimizing paperwork and streamlining processes 3.