E-Commerce Tax in Focus
Once defined by convenience, online shopping now carries greater responsibility. Digital transactions are no longer just about ease and quick clicks. They come with obligations that reflect the growing significance of the digital economy. In this transformation, e-commerce emerges not merely as a lifestyle choice, but a driving force reshaping Indonesia’s economic future.
E-commerce refers to the exchange of goods and/or services through electronic systems. Its rapid expansion in recent years has turned it into a major driver of the national economy. Yet alongside these opportunities, the government faces new challenges, particularly in regulation and taxation.
VAT Treatment on E-Commerce
In its early development, e-commerce was largely viewed as an extension of conventional trade. Minister of Finance Regulation (MoF Reg.) No. 210/PMK.010/2018 was issued to require online platforms and merchants to collect and issue tax invoices, as well as to remit and report Value Added Tax (VAT) through monthly returns. The regulation, however, was later revoked as it was considered to impose an excessive administrative burden on businesses
From the tax perspective, the treatment of e-commerce is largely similar to that of offline trade, with Value Added Tax (VAT) remaining the main tax imposed on the delivery of goods and services. The emphasize is on consumption rather than on business activities as subjects of income tax.
The Issuance of MoF Reg. No. 37/2025
The enactment of MoF Reg. No. 37/2025 marks a significant milestone in the taxation of digital transactions. Effective July 14, 2025, the regulation introduces a clear obligation to collect Income Tax (Article 22) on transactions carried out through e-commerce platforms. Under Article 8(1), sellers or business operators conducting transactions via these platforms are subject to a 0.5% of the gross transaction value, calculated before VAT and Luxury Goods Sales Tax.
Tax Collection mechanism has been designed to be more practical. Marketplaces that meet certain criteria are no longer regarded merely as intermediaries, but are appointed as tax collecting agents responsible for remitting the collected tax to the state treasury. Under Article 3(1), these criteria include the use of escrow accounts to facilitate transactions and meeting specified thresholds of transaction value or user traffic within a 12-month period.
Furthermore, the implementation of Article 22 Income Tax under MoF Reg. 37/2025 introduces differentiated treatment based on the taxpayer’s profile. For taxpayers under the final income tax regime, the 0.5% collected tax is treated as a final settlement of their tax liability. For businesses under the general income tax regime, the collected tax is creditable against their annual corporate income tax. Meanwhile, individual taxpayers with annual turnover below IDR 500 million are exempted from tax collection, provided they have submitted a declaration letter to the marketplace.
In accordance with Article 10(1), the government has introduced several exemptions to prevent undue burdens on small businesses. These include merchants with annual turnover below IDR 500 million, logistics partners, holders of exemption certificates (Surat Keterangan Bebas/SKB), sellers of prepaid phone credits and starter packs, traders of gold and other precious stones, as well as transactions involving the transfer of land and building rights. These exemptions protect small enterprises from excessive compliance costs, while enabling the government to pursue its broader objectives of expanding the tax base and streamlining collection.
This regulatory change reaffirms the government’s commitment to establish the digital economy as key to its broader economic development strategy. By introducing a 0.5% income tax under MoF Reg. 37/2025, the policy ensures greater fairness between digital and conventional businesses while reinforcing the fiscal foundation in the digital era. (Shintya)