Jakarta. The upcoming income tax collection system for marketplace transactions should be fully automated and integrated with taxpayer and transaction data to prevent additional administrative burdens on micro, small and medium enterprises (MSMEs), an economist said.

The government is scheduled to begin implementing the marketplace collection mechanism on Nov. 1, requiring designated e-commerce platforms to collect Income Tax Article 22 from domestic merchants.

Institute for Development of Economics and Finance (Indef) economist Rizal Taufikurahman said the collection system should be linked to merchants' national identification numbers (NIK), taxpayer identification numbers (NPWP) and transaction records.

“Collection needs to be automated and integrated with NIK and NPWP as well as transaction data to prevent double taxation and ensure MSMEs are not burdened with new procedures,” Rizal said.

Under the policy, designated marketplaces will collect tax equivalent to 0.5% of merchants' gross turnover, excluding value-added tax and luxury goods sales tax. The government has stressed that the mechanism does not introduce a new tax obligation but changes how existing income tax liabilities are collected.

Individual taxpayers with annual gross turnover of up to Rp 500 million ($28,100) are exempt from the collection, provided they submit the required turnover declaration to the marketplace.

Rizal said the 0.5% rate was relatively low but cautioned that because the levy is calculated on turnover rather than profit, its impact could still be significant for MSMEs operating on thin margins.

He said the Rp 500 million threshold should effectively protect micro businesses so the policy does not erode margins, push sellers to raise prices or encourage merchants to move transactions outside formal marketplace platforms.

Four major e-commerce platforms -- Tokopedia, Shopee, Lazada and Blibli -- have previously been designated by the Directorate General of Taxes to collect the levy. Following the government's decision to postpone implementation, the tax office said the designation decisions would be canceled and the platforms subsequently redesignated ahead of the new implementation date.

The collection mechanism was originally scheduled to take effect earlier this year but was postponed until Oct. 31, with collection set to begin Nov. 1. The government said the delay was intended to help preserve consumer purchasing power amid economic concerns.

Beyond the tax rate and turnover threshold, Rizal said simplifying administration would be crucial to the policy's effectiveness.

Under an ideal system, he said, MSMEs should be able to continue selling as usual while marketplaces handle tax collection, issue withholding documents and integrate the information into tax reporting.

“Success should not be measured solely by additional revenue, but also by increased compliance with the lowest possible compliance costs,” Rizal said.

The government's framework broadly follows that approach. Under Finance Ministry Regulation No. 37/2025, marketplaces are responsible for collecting, remitting and reporting the tax, while electronic invoices issued by the platforms can serve as proof of collection.

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