The Indonesian Ministry of Finance has enacted Regulation No. 37/2025 (PMK 37/2025), which introduces significant changes to the taxation mechanism for online commerce by appointing electronic trading system organizers as Income Tax collectors. This regulation takes effect from July 14, 2025, and mandates online marketplace platforms to withhold Article 22 Income Tax on income earned by domestic sellers through electronic transactions. The move aligns with Indonesia’s broader digital tax reform agenda aimed at expanding the tax base and modernizing collection procedures. 

This article explores the key provisions of PMK 37/2025 and how A&M can help businesses and platforms comply with the new obligations.

Key Provisions of PMK 37/2025 and Their Implications

1.) Broad Scope of Applicability^[1] 

Under PMK 37/2025, electronic trading system organizers — commonly known as e-commerce platforms — are officially appointed as Article 22 Income Tax collectors by the Minister of Finance. This applies to both domestic and foreign-based platforms that meet certain thresholds of transaction volume or user traffic in Indonesia, with specific thresholds to be determined and announced by the Minister of Finance.

Unlike earlier interpretations by several news media, which limited Article 22 WHT applicability to sellers with an annual turnover between IDR 500 million and IDR 4.8 billion, the regulation now applies to all domestic sellers, including those with turnover exceeding IDR 4.8 billion. The term “domestic sellers” is defined broadly to include both individuals and entities conducting electronic transactions with the buyer of goods and/or services, including delivery service companies, insurance companies, and other parties, from or within Indonesian territory.

2.) Withholding Tax of 0.5% on Gross Turnover^[2]

Previously, sellers with annual turnover up to IDR 4.8 billion could opt for the Final Income Tax regime under PP 23/2018, which also applied a 0.5% rate on gross turnover. However, this amount was self-paid (self-assessed) by the sellers themselves and was not withheld by the marketplace or e-commerce platform.

Now, the e-commerce platforms must withhold 0.5% Article 22 Income Tax on the gross turnover (excluding VAT and sales tax on luxury goods) that is received by domestic sellers from sales conducted on their platforms. This tax must be collected at the time of payment receipt, whether in IDR or foreign currencies (which must be converted to IDR using the prevailing official exchange rate). 

This policy does not change the fundamental principle but rather provides convenience for sellers in fulfilling their tax obligations, as the tax payment process is carried out through a simpler and integrated withholding tax system linked to the platforms where they conduct their sales.

3.) Creditability of Article 22 Withheld for Sellers^[3]

The Article 22 Income Tax withheld by platforms is creditable against the sellers' overall income tax liability for the current tax year. For sellers subject to final income tax regimes (e.g., under Article 4(2) or Article 15 of the Income Tax Law), the withheld amount serves as a direct payment toward their final tax obligation. Any shortfall must be self-deposited by the seller, while overpayment can be claimed as refunds through standard tax procedures, ensuring the withholding does not result in double taxation.

4.) Exemptions for Certain Sellers and Transactions^[4] 

Individual sellers with annual gross turnover up to IDR 500 million are exempt from Article 22 WHT, provided they submit a declaration letter in the format stipulated in the regulation annex.

Other exemptions are as follows:

• Individuals selling via ride-hailing or delivery apps
• Sales of mobile credit, starter packs, and gold (bars or jewelry) 
• Real estate transactions including land or building sales or related agreements
• Sellers holding an official tax exemption certificate 

For these exempted categories, while platforms are not obligated to withhold Article 22 tax, the seller must still fulfill tax obligations in accordance with general tax laws.

5.) Seller Responsibilities^[5] 

To ensure proper tax treatment, domestic sellers must submit the following information to platforms before receiving income:

• Taxpayer Identification Number (NPWP) or National Identity Number (NIK)
• A correspondence address
• Relevant exemption documents, such as declaration letters or tax exemption certificates

Sellers must update this information annually, and if there is any change in turnover (e.g., exceeding IDR 500 million), it must be declared within the same month in which the threshold is crossed.

Additionally, sellers must self-report and pay any remaining final income tax (if applicable) and submit it through the Unified Income Tax Periodic Return. Failure to do so may result in tax penalties.

6.) Platform Obligations and Reporting^[6] 

E-commerce platforms are now formally responsible for:

• Withholding, depositing, and reporting Article 22 WHT
• Issuing billing documents that include details of seller and buyer, tax amounts, and transaction summaries
• Submitting periodic tax returns and detailed supporting documentation to the Directorate General of Taxes

Billing documents serve as proof of tax collection and must reflect all necessary transaction details, including any corrections/amendments or cancellations. These obligations also extend to foreign-based platforms if they meet the criteria set by the regulation.

Noncompliance with these requirements may result in administrative penalties under both tax laws and electronic system regulations.

7.) Transitional Rules for 2025^[7] 

For the 2025 tax year, all sellers must submit required information (including declarations for exemptions or turnover status) within one month from the date their platform is officially appointed as a tax collector. This transitional rule is designed to provide a grace period before penalties and enforcement begin.

Key Impact and Observations

PMK 37/2025 signifies a pivotal shift in Indonesia’s taxation of the digital economy. By making online platforms responsible for withholding Article 22 Income Tax, the government ensures greater compliance and streamlines tax collection from a fast-growing and often fragmented sector.

This regulation enhances tax transparency and aligns with global trends, where marketplaces and digital platforms are increasingly drawn into the tax compliance chain. For sellers, especially MSMEs (Micro, Small, and Medium Enterprises), the regulation introduces more administrative steps, though exemptions remain for very small-scale businesses.

How A&M Can Help

Adapting to PMK 37/2025 requires a clear understanding of its provisions and effective implementation across seller onboarding, tax documentation, transaction reporting, and system updates. A&M offers a comprehensive compliance solution, including:

• Evaluation of seller eligibility and exemption claims
• Standardized processes for tax data collection and validation
• Setup and maintenance of Article 22 WHT reporting mechanisms
• Advisory on tax reconciliations and final tax liabilities for sellers

Conclusion

Regulation PMK 37/2025 represents a significant evolution in Indonesia’s efforts to modernize tax collection in the digital economy. Its implementation creates new responsibilities for platforms and sellers alike but also provides clarity, structure, and a foundation for stronger tax governance in online trade.

Ensuring early compliance and understanding the practical impact of each provision will be key to avoiding penalties and optimizing operational efficiency under the new rules.

[1] Ministry of Finance of the Republic of Indonesia, PMK-37/2025 on the Appointment of Other Parties as Income Tax Collectors and Procedures for Collection, Deposit, and Reporting of Income Tax Collected by Other Parties on Income Received or Obtained by Domestic Traders through Electronic System Commerce, Article 2 and 3, promulgated July 14, 2025, Ministry of Finance Legal Documentation and Information Network, https://jdih.kemenkeu.go.id/dok/pmk-37-tahun-2025

[2] Article 7 and Article 8 of PMK 37/2025

[3] Article 8 of PMK 37/2025

[4] Article 10 of PMK 37/2025

[5] Article 6 and 7 of PMK 37/2025

[6] Article 12, 14, and 15 of PMK 37/2025

[7] Article 17 of PMK 37/2025