Jakarta. The government will begin requiring e-commerce platforms to collect value-added tax (VAT) on transactions conducted by merchants through their marketplaces starting in July, in a move aimed at improving tax compliance and creating a more level playing field between online and brick-and-mortar retailers.

Finance Minister Purbaya Yudhi Sadewa stressed on Monday that the policy does not introduce a new tax but changes the mechanism for collecting VAT on taxable transactions already covered under existing regulations.

“This will take effect in July, but it is not a new tax,” Purbaya told reporters at the parliament complex in Jakarta.

Under the new system, domestic e-commerce platforms will be appointed as VAT collectors for eligible transactions conducted by merchants on their marketplaces. The measure is expected to streamline tax collection, strengthen compliance, and improve government oversight of Indonesia's fast-growing digital economy.

“Marketplaces are not being subjected to a new tax,” Purbaya said. “We simply want to ensure that VAT that should already be paid is properly collected.”

He said the policy was introduced in response to complaints from conventional retailers, who argued that physical stores have been complying with VAT obligations while some online sellers have not.

“Many offline businesses have told me, 'We pay VAT, so why don't online merchants?'” Purbaya said.

The government hopes the new mechanism will ensure equal tax treatment for businesses regardless of whether they sell through physical stores or digital platforms.

By shifting VAT collection to marketplace operators, authorities expect to reduce reliance on voluntary compliance by individual merchants while integrating tax collection directly into online transaction systems.

Officials also believe the policy will improve transparency in Indonesia's rapidly expanding e-commerce sector by providing better transaction records and reducing opportunities for tax evasion within the digital economy.

Indonesia has introduced a series of tax administration reforms in recent years to improve compliance and broaden the tax base as digital commerce continues to expand. Requiring marketplace operators to collect VAT follows a model adopted in several other jurisdictions, where online platforms play a greater role in collecting indirect taxes on behalf of merchants.

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