Jakarta. Indonesia has postponed the implementation of a 0.5% income tax collection scheme for domestic sellers on e-commerce platforms, citing concerns over economic growth and consumer purchasing power.

Finance Minister Purbaya Yudhi Sadewa said Wednesday that the policy, initially scheduled to take effect on Aug. 1, would be delayed until economic conditions improve.

“The marketplace tax will be postponed. It will not start this August,” Purbaya told reporters at the Finance Ministry in Jakarta.

Under the scheme, designated e-commerce platforms would collect Article 22 income tax of 0.5% of sellers’ gross turnover, excluding value-added tax. Microbusinesses with annual turnover below Rp500 million (around $28,000) would be exempt from withholding and instead submit a declaration. Tokopedia, Shopee, Lazada, and Blibli had previously been designated as tax collectors.

Purbaya said the government considered current economic conditions insufficient to introduce the measure.

“We will postpone it until economic conditions and purchasing power improve. Growth of 5.29% is not strong enough. We want to grow faster,” he said.

Indonesia’s economy expanded 5.29% year-on-year in the second quarter of 2026, slowing from 5.61% in the first quarter.

The government will assess more than just gross domestic product growth before deciding when to implement the tax collection scheme. Consumer confidence and retail sales will also be monitored to determine whether an economic recovery is translating into stronger household purchasing power.

The Finance Ministry will issue a regulation formally delaying the policy, although it has not set a new implementation date.

“We want to grow faster. Once there are real indications of improvement, we will implement it. Perhaps we will postpone it for several months,” Purbaya said.

Digital Tax Collection

The policy is part of the government’s broader effort to improve tax collection from Indonesia’s rapidly expanding digital economy.

Data from the Directorate General of Taxes showed that of around 1.6 million MSME taxpayers in 2024, only about 653,000 paid final income tax. More than 900,000 businesses did not contribute optimally to tax revenues, with many operating online.

The government introduced the scheme through Finance Ministry Regulation No. 37/2025, which appoints e-commerce platforms to collect income tax from domestic merchants selling through electronic systems.

The “collect at the source” mechanism allows marketplaces to automatically withhold 0.5% of a seller’s gross turnover.

The government has stressed that the policy is not a new tax but a change in the collection mechanism intended to make tax administration more efficient and transparent.

Both domestic and foreign platforms would also be required to remit collected taxes and regularly report transaction data to the tax authority.

However, the government faces implementation challenges, including potential duplicate tax collection and difficulties in monitoring foreign-based e-commerce platforms.

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