Jakarta. Indonesia has begun requiring major e-commerce platforms to collect income tax on behalf of qualifying online merchants, part of a government effort to improve tax compliance and boost revenue from the country's fast-growing digital economy.

The policy, which took effect on July 1, appoints Tokopedia, Shopee, Lazada, and Blibli as tax collectors for a 0.5% withholding tax under Article 22 of Indonesia's Income Tax Law. The obligation will become operational on Aug. 1 following a one-month transition period.

The tax applies only to domestic online sellers with annual gross revenue exceeding Rp 500 million (about $31,000). Consumers will continue paying for purchases as usual, while the designated marketplaces will deduct the tax, remit it to the government and report the payments to the tax authority.

Finance Ministry Director General of Taxes Bimo Wijayanto said the measure does not introduce a new tax but changes how existing income tax is collected, shifting the responsibility from individual merchants to designated digital platforms.

"We hope this mechanism will improve taxpayer compliance and strengthen the accuracy of our tax administration system," Bimo said at a press conference on Wednesday.

The government expects tax revenue from the digital commerce sector to double under the new collection system, targeting between Rp 16 trillion rupiah ($892 million) and Rp 24 trillion annually. The estimate reflects expected gains from higher compliance, improvements to Indonesia's Coretax administration system and consultations with businesses, including small and medium-sized enterprises.

The Indonesian E-Commerce Association (iDEA) said it respects the new regulation and acknowledged that it changes only the tax administration process rather than imposing an additional levy.

The industry's priority, iDEA Chairman Budi Primawan said, is to ensure the new system is implemented effectively, provides legal certainty and minimizes operational disruption for both marketplace operators and merchants.

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