Ministry of Finance has issued Ministry of Finance (PMK) No. 37/2025, establishing a framework that requires electronic trading platforms to act as income tax withholders on behalf of merchants using their systems. The new decree sets out detailed rules for the appointment of these platforms, the withholding mechanism, seller obligations, exemptions, and administrative procedures.
Designation of electronic platforms as tax withholders. Under PMK No. 37/2025, which becomes effective since 14 July 2025, electronic platforms are designated as parties responsible for withholding Income Tax Article 22 (PPh 22) on transactions conducted through their systems. Platforms are selected based on factors such as transaction value and user traffic thresholds, with authority for appointment delegated to the Directorate General of Taxes. Once appointed, platforms must withhold PPh 22 at 0.5% of the gross transaction value of the sellers (merchants), excluding VAT and luxury goods tax, at the time of payment receipt, starting the month after a seller (merchant) declares turnover exceeding Rp500m in the current tax year. Electronic platforms appointed as tax withholders must issue electronic invoices as proof of withholding for sellers, deposit collected taxes to the tax office monthly, and file monthly tax returns detailing seller and transaction information. For the 2025 tax year, sellers are required to submit the information within a month after the platform s formal appointment. Non-compliance by platforms and sellers is subject to sanctions under Indonesian tax laws.
Sellers registration and information requirements. Merchants transacting through the e-commerce platforms are required to provide their Tax Identification Number (NPWP) or National Identity Number (NIK) and correspondence address before receiving payments. Sellers whose annual turnover does not exceed Rp500m can obtain exemption from withholding by submitting a formal declaration, which must be renewed annually if turnover remains below Rp4.8bn note that turnover >Rp4.8bn will be deemed as non-SME and is subject to a 21% tax rate on their taxable income with obligation to collect 11% VAT. Furthermore, sellers holding official tax exemption certificates must provide these to the platform to avoid withholding.
Exemptions from withholding include sellers with turnover below Rp500m, sales of prepaid phone credit and SIM cards, gold jewellery and bullion, transfers of land and building rights, delivery and expedition services provided by individual partners of technology platforms, and transactions by sellers with tax exemption certificates.
Our view: PMK No. 37/2025 requires e-commerce platforms to collect sellers tax IDs and turnover declarations, enabling better identification of merchants underreporting sales to remain in the 0.5% SME tax bracket (<Rp4.8bn annual gross turnover) and avoid 11% VAT. This may create short-term GMV risks for platforms like Sea Ltd. (Not Rated) and marginally on GoTo (Buy) via its 20% stake in Shop | Tokopedia. However, it is a long-term positive for Indonesia, improving tax compliance and levelling the playing field for businesses. Key beneficiaries include select modern brick & mortar retailers (MDIY, ACES) and consumer goods producer (UNVR) competing with fragmented online sellers. See our previous note for more details: https://research.mandirisekuritas.co.id/r/dVr4?e=sekretariat@himdasun.org.
