Indonesia Mulls Regulations Requiring eCommerce Firms to Collect Sales Tax

Indonesia is preparing to introduce a new policy that would require e-commerce platforms to collect and remit taxes on behalf of their sellers. The proposed regulation, expected to be announced as early as July 2025, is part of the government’s efforts to increase revenue and create a fairer playing field between online marketplaces and traditional retailers.

According to sources familiar with the matter, the new rule would apply to sellers who earn between 500 million and 4.8 billion rupiah ($30,900 to $296,000) annually. These sellers, considered small and medium-sized enterprises (SMEs), are already required to pay a 0.5% tax on their sales income. Under the proposed regulation, the e-commerce platforms would now be responsible for withholding this tax at the point of sale and passing it on to tax authorities.

This marks Indonesia’s second attempt at tightening tax collection from digital marketplaces. A similar regulation was introduced in 2018 but was quickly withdrawn just three months later due to significant backlash from the industry. This time, however, the government appears more determined, particularly in light of falling tax revenues. Between January and May 2025, Indonesia’s revenue dropped by 11.4% compared to the same period last year, largely due to low commodity prices, slow economic growth, and disruptions caused by a recent tax system upgrade.

Some of the major e-commerce platforms likely to be impacted include TikTok Shop (owned by ByteDance), Tokopedia (GoTo), Shopee (Sea Limited), Lazada (Alibaba), Blibli, and Bukalapak. However, these platforms have expressed strong concerns over the proposal. Industry insiders warn that the regulation could increase administrative burdens, drive away sellers from digital marketplaces, and overwhelm the current tax infrastructure, which has already been facing technical difficulties since its upgrade earlier this year.

Despite the resistance, the regulation could have far-reaching effects. Indonesia’s e-commerce sector is booming, with a gross merchandise value (GMV) of $65 billion in 2024 and projections showing it could reach $150 billion by 2030, according to a joint report by Google, Temasek, and Bain & Company.

The Indonesian finance ministry, which would oversee the implementation of this regulation, has not issued an official statement yet. Meanwhile, the country’s e-commerce association, idEA, has refrained from confirming the details but acknowledged that such a policy would impact millions of local sellers.

As the government weighs this move, it walks a fine line between boosting tax revenues and supporting the continued growth of one of Southeast Asia’s most vibrant digital economies.

E-commerce giants like Alibaba Group Holding Ltd. (NYSE: BABA) could see their operations in Indonesia impacted once their platform there is required by law to collect sales tax on behalf of the government.

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