Indonesia to mandate seller tax collection by eCommerce platforms: report

Indonesia is reportedly preparing to impose a regulation that will make eCommerce platforms directly responsible for collecting taxes from their sellers - a move that could shore up state revenues and bring online marketplaces in line with traditional retailers.

The new directive, confirmed by industry sources and a government presentation seen by Reuters, could revive a controversial 2018 policy that was scrapped just three months after its launch due to industry backlash. This time, the regulation is framed as an essential step to “level the playing field”.

The plan, which could be announced as early as July, would require platforms such as TikTok Shop, Tokopedia, Shopee, Lazada, Blibli, and Bukalapak to withhold 0.5% of sales income from sellers classified as small to medium enterprises - those with an annual turnover between IDR 500 million (US$31,000) and IDR 4.8 billion (US$295,000).

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Reuters stated that the government’s tax office has presented the plan to platform operators.

The country’s eCommerce association, idEA, said that the proposed policy will affect millions of sellers if enforced, though it stopped short of confirming the details.

The reported measure comes at a time when Southeast Asia’s largest economy is feeling the strain from subdued commodity prices, soft GDP growth, and disruptions in its tax system. From January to May, government revenues slid 11.4% year-on-year to IDR 995.3 trillion (US$61 billion), according to official data.

Indonesia’s digital economy, however, is booming. A joint report by Google, Temasek, and Bain & Co estimates the country’s eCommerce gross merchandise value will reach US$150 billion by 2030.

Still, the industry isn’t taking the potential tax mandate lightly. Platforms have warned that such a regulation could drive sellers away and increase administrative costs.

The concerns are amplified by recent glitches in the tax system’s upgraded backend, raising questions about whether it is equipped to process the new data flows without further breakdowns.

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