E-Commerce Under the Tax Lens - Income Tax Compliance for Digital Platforms

• 12 Sep 2025

The Government of the Republic of Indonesia has recently issued Minister of Finance (“MoF”) Regulation No. 37 of 2025 on Appointment of Third Parties to Collect Income Tax, and the Procedures for Collecting, Remitting, and Reporting Income Tax on Earnings Received by Domestic Traders Through Electronic Trading Systems (“MoF Reg. 37/2025”). Issued on 14 July 2025, the key objective of MoF Reg. 37/2025 is to broaden public participation in national development through tax contributions, while reinforcing the principles of legal certainty, fairness, administrative convenience, and efficiency in tax collection. This regulation aims to enhance tax collection mechanisms in line with Indonesia’s evolving digital economy landscape by tapping into the e-commerce market.

The increasing volume of transactions conducted through Electronic Trading Systems (Perdagangan Melalui Sistem Elektronik or “PMSE”), or also known colloquially as e-commerce platforms, has necessitated a more structured approach to income tax collection from domestic traders operating in the e-commerce sphere. The new framework under MoF Reg. 37/2025 introduces the concept of appointing third-party tax collectors, thereby streamlining compliance and reducing administrative burdens of taxpayers and the tax authority.

In view of the above, MoF Reg. 37/2025 represents a significant development in Indonesia’s tax administration, particularly in addressing the unique challenges of the digital economy. This Legal Insight provides a summary of the key provisions introduced by MoF Reg. 37/2025, with a focus on: (i) Appointed Third Parties as Tax Subjects, (ii) Merchants’ Obligations, (iii) Exemptions, and (iv) Periodic Tax Filing.

Appointed Third Parties as Tax Subjects

Under MoF Reg. 37/2025, the Minister of Finance is authorized to appoint third parties (“Appointed Third Party”) as income tax collectors to collect, remit, and report the income tax on earnings received or obtained by Domestic Merchants (“Merchants”) that are active through PMSE (Article 2 paragraph 1 of MoF Reg. 37/2025).

The income tax collected under this mechanism falls within the scope of Income Tax Article 22 (PPh Pasal 22) (Article 2 paragraph 2 of MoF Reg. 37/2025), calculated at 0.5% of the gross revenue, excluding Value Added Tax (PPN) and Sales Tax on Luxury Goods (PPnBM) (Article 8 of MoF Reg. 37/2025).

The Appointed Third Parties are defined as PMSE Operators, or commonly known as e-commerce platforms, that are domiciled either within or outside the territory of the Republic of Indonesia, provided they meet certain criteria (Article 3 paragraph 1 of MoF Reg. 37/2025).

Pursuant to its implementing regulation, the Director General of Taxes (“DGT”) Regulation No. PER-15/PJ/2025 on Certain Criteria Thresholds for Third Parties and the Appointment of Third Parties to Collect, Remit, and Report Income Tax on Earnings Received or Obtained by Domestic Merchants Through Electronic Trading Systems (“DGT Reg. 15/2025”), the specific criteria are as follows (Article 4 of DGT Reg. 15/2025):

1. The use of an escrow account to receive revenue; and
2. Achieving one or both of the following thresholds within a 12-month period;
   • Transaction values in Indonesia exceeding IDR 600 million in 12 months, or IDR 50 million in 1 month; and/or
   • Traffic or user count in Indonesia exceeding 12,000 users in 12 months, or 1,000 users in 1 month.

Merchants’ Obligations

Merchants are defined as individuals or entities that receive income using a bank account, or other similar financial accounts, and transact using an Internet Protocol address located in Indonesia or a phone number with the Indonesian country code (+62) (Article 5 paragraph 1 of MoF Reg. 37/2025). This definition also extends to shipping or courier service companies, insurance companies, and other parties conducting transactions with buyers of goods and/or services via PMSE (Article 5, paragraph 2 of MoF Reg. 37/2025).

Merchants are required to provide the Appointed Third Party with: (i) Tax Identification Number (Nomor Pokok Wajib Pajak or “NPWP”) or National Identification Number (Nomor Induk Kependudukan or “NIK”); and (ii) a correspondence address (Article 6 paragraph 1 of MoF Reg. 37/2025).

Additional documentation may be required in certain circumstances as defined under Article 6 paragraphs 2 and 3 of MoF Reg. 37/2025, specifically in the following contexts:

1. Any merchant with an annual gross turnover of up to IDR 500 million, must provide a written statement declaring such turnover; and
2. Any merchant holding an exemption certificate of income tax withholding and/or collection (“Tax Exemption Certificate”) is required to provide a copy of such certificate.

Exemptions

MoF Reg. 37/2025 also stipulates specific circumstances, under which the Appointed Third Party is not required to collect Income Tax Article 22 from Merchants. This exemption applies to the income derived from transactions involving (Article 10 paragraph 1 of MoF Reg. 37/2025):

1. Any small-scale domestic individual taxpayer whose gross turnover does not exceed IDR 500 million in the current fiscal year, and who has submitted a written statement declaring such turnover;
2. Any individual courier service acting as a partner of technology-based application companies providing transportation services;
3. Any merchants who has submitted a Tax Exemption Certificate;
4. Any sale of prepaid phone credit and SIM card;
5. Any sale of jewellery and related products, including gold jewellery, gold bullion, jewellery made entirely of non-gold materials, gemstones, and other similar precious stones; and/or
6. Any transaction involving lands and/or buildings.

While these transactions are exempted from collection by the Appointed Third Party, the underlying income remains subject to income tax. In such cases, the withholding and/or collection, remittance, and reporting of income tax must still be carried out by the Merchant in accordance with the prevailing tax laws and regulations (Article 10 paragraph 2 of MoF Reg. 37/2025).

In cases where a Merchant has received a profit turnover that exceeds IDR 500 million during the relevant tax year, the Merchant must submit a new statement to the appointed third party no later than the end of the month, to report that their profit turnover has exceeded this threshold (Article 6 paragraphs 6 and 7 of MoF Reg. 37/2025).

Periodic Tax Filing

For each tax period, the Appointed Third Party must deposit the collected Income Tax from the Merchants per Article 22 into the State Treasury (Article 14 of MoF Reg. 37/2025). In addition, the Appointed Third Party is obligated to provide the relevant supporting information and documentation pertaining to the deposited tax of the Merchant (Article 15 paragraph 1 of MoF Reg. 37/2025) as stated above.

Concluding Remarks

MoF Reg. 37/2025 marks a significant step in aligning Indonesia’s tax administration with the realities of its rapidly expanding digital economy. By introducing a third-party collection mechanism, the regulation not only broadens the government’s tax collection sources but also streamlines compliance and reduces administrative friction for both taxpayers and the tax authority.

For e-commerce platforms, the new obligations require careful readiness on the part of the PMSE Operators, from meeting eligibility thresholds to ensuring timely tax deposits and accurate reporting. Merchants, likewise, must prepare for stricter compliance, particularly in providing accurate turnover declarations and maintaining up-to-date exemption documentation where applicable.

Given the operational and compliance implications, affected stakeholders should promptly review their existing systems, contractual arrangements, and internal controls to ensure full adherence to MoF Reg. 37/2025. Proactive preparation will be the key to avoiding potential administrative sanctions, while leveraging the efficiencies intended by this reform.

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The article above was prepared by Audria Putri (Senior Associate) and Albert Barnabas (Trainee Associate).