Gov't Turns to Digital Tax to Boost Revenue as Marketplaces Face Withholding Duty Mandate
Main Takeaways
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JAKARTA, Investortrust.id — The Indonesian government has reinforced its commitment to digital taxation by mandating online marketplaces such as Shopee, Tokopedia, and TikTok Shop to collect income tax from sellers, in an effort to strengthen revenue and improve tax compliance in the growing digital economy.
Officials clarified that the move—requiring marketplaces to withhold income tax under Article 22 of the Income Tax Law—is not a new levy but part of ongoing administrative reforms. It comes as the state grapples with a significant revenue shortfall, collecting only Rp 995.3 trillion ($61 billion), or 33.1% of the annual budget target of Rp 3,005.1 trillion ($184 billion), during the first five months of 2025.
“This is not a new tax. It’s about tax administration,” said Febrio Nathan Kacaribu, Director General of Economic and Fiscal Strategy at the Ministry of Economy, on Saturday, June 28, 2025.
“We’re asking platforms to partner with us and act as withholding agents, just like Google and Netflix already do.”
Trade and Finance Ministries Coordinate, With Final Policy Still Evolving
Trade Minister Budi Santoso emphasized that the policy is under the jurisdiction of the Ministry of Finance and still being finalized by the Directorate General of Taxes (DJP).
“It’s currently at the Directorate General of Taxes. The Ministry of Finance has authority,” Budi told reporters on Thursday.
While confirming that the Ministry of Trade had been involved in the regulation's early discussions, he declined to comment on the potential impact on online merchants, saying only, “Let’s wait and see.”
The proposed regulation is expected to apply only to merchants whose annual turnover exceeds Rp 500 million ($30,600). Sellers below that threshold will be exempt, according to Febrio.
Response to Weak Revenue, Delayed Tax Hikes, and Missed Dividends
Finance Minister Sri Mulyani Indrawati has framed the move as part of a broader strategy to address declining state revenue, partly due to falling commodity prices and the government’s decision to delay a planned VAT increase to 12% in early 2025. The state has also missed out on dividend contributions from state-owned enterprises.
“We’ve calculated the impact of these lost revenues,” Sri Mulyani said in an interview with Bloomberg Television. “That’s why we’ve created a task force to identify potential income sources from enforcement, leakages, and compliance.”
She added that digital taxation—particularly through platform-based mechanisms—will play a vital role in this strategy.
Curbing the Shadow Economy with Digital Enforcement
The DJP confirmed that appointing marketplaces as tax collectors is designed to reduce the size of Indonesia’s shadow economy, where many online transactions go unreported.
“This aims to enhance oversight of digital economic activity and address hidden income, especially from online sellers,” said DJP spokesperson Rosmauli. She noted that the withholding mechanism does not alter the underlying tax obligations on sales of goods and services—it merely changes the point of collection.
Rosmauli added that the policy is designed to ensure proportional compliance and reflect the true scale of digital enterprises. “We hope this can lead to a fairer and more accurate tax system in the digital sector,” she said.