Indonesia to require e-commerce platforms to collect tax on sellers

JAKARTA - Indonesia’s

finance ministry

will require e-commerce platforms to collect and pass on an income tax on sales made by small- and medium-sized sellers, according to new regulations published on July 14.

Platforms that meet certain criteria must withhold and pass on a 0.5 per cent tax on sales made by sellers with an annual turnover of between 500 million rupiah (S$40,000) and 4.8 billion rupiah.

They must also share the sellers’ information with tax authorities.

The ministry will notify a platform if it meets the criteria, which will be based on site traffic and total transaction value over the past 12 months. While the directive is effective immediately, platforms will be given a month to comply.

Reuters reported exclusively in June on the plan to impose the tax.

The tax office has said the rules are intended to tackle the “shadow economy”.

Indonesia’s e-commerce association idEA has said its members would comply, but expressed concern over the implementation timeline, as the regulation will impact millions of sellers.

Indonesia’s main e-commerce operators include ByteDance’s TikTok Shop and Tokopedia, Sea Limited’s Shopee, the Alibaba-backed Lazada, Blibli and Bukalapak.

South-east Asia’s largest economy has a booming e-commerce industry, with 2024’s estimated gross merchandise value of US$65 billion (S$83.2 billion) expected to grow to US$150 billion by 2030, according to a report by Google, Singapore’s investment company Temasek and consultancy Bain & Co. REUTERS