Local Marketplaces to Become Income Tax Collectors

The government is currently preparing a Regulation of the Minister of Finance (“Regulation”) on the designation of marketplaces as income tax collectors. The policy allows electronic trading system operators (perdagangan melalui sistem elektronik - “PMSE”) to collect income tax (pajak penghasilan - “PPh”) on domestic merchant transactions on digital platforms.

“This policy is expected to simplify administration and improve tax compliance in the e-commerce sector,” said an official from the Ministry of Finance to Hukumonline.

Currently, marketplaces in Indonesia are not designated as PPh collectors. Meanwhile, for cross-border electronic commerce transactions, Law No. 2 of 2020 (“Law 2/2020”) stipulates that foreign merchants, foreign service providers, and/or foreign PPMSE that meet the requirements of significant economic presence may be subject to income tax or electronic transaction tax.