Indonesia’s Finance Minister Sri Mulyani has issued a regulation requiring ecommerce platforms to collect income tax from domestic merchants.

This rule, outlined in Minister of Finance Regulation (PMK) Number 37 of 2025, took effect on July 14, 2025.

The regulation designates ecommerce platforms as tax collectors for income generated by domestic merchants operating through electronic systems.

Merchants include individuals or entities conducting transactions using Indonesia-based internet protocols or phone numbers. The rule also extends to courier services, insurance companies, and other entities transacting electronically.

Merchants with annual gross revenue under 500 million rupiah (US$30,780) must provide their tax identification number (NPWP) or national identification number (NIK).

They are also required to submit a declaration of their revenue status. For those with revenue exceeding IDR 500 million (US$30,780), a formal statement to the e-commerce platform is required.

The income tax, classified as Article 22 tax, will be levied at 0.5% of the merchant’s gross revenue. This is excluding value-added tax and luxury goods tax.

🔗 Source: CNBC Indonesia

🧠 Food for thought

1️⃣ Indonesia’s evolving e-commerce tax framework reflects global digital economy challenges

The new regulation requiring e-commerce platforms to collect income tax from merchants represents a significant evolution in Indonesia’s approach to digital taxation, not an abrupt change.

Indonesia has been methodically developing its e-commerce tax framework since at least 2018, when Finance Minister Sri Mulyani signed Regulation No. 210/PMK.010/2018 that required marketplace platforms to register as Taxable Entrepreneurs and obtain Taxpayer Identification Numbers (NPWP)1.

That earlier regulation established the foundation by mandating transaction reporting and clarifying that e-commerce businesses would be subject to the same tax obligations as traditional retailers, including VAT collection and income tax obligations2.

The 2025 regulation marks Indonesia’s progression from simply requiring registration and reporting to actively making platforms responsible for tax collection, following a pattern seen in many countries adapting their tax systems to the digital economy.

This step-by-step approach demonstrates how tax authorities worldwide are responding to the challenge of ensuring compliance in rapidly evolving digital marketplaces while balancing the need to support sector growth.

2️⃣ Small merchant thresholds reflect careful policy balance between revenue and economic development