Indonesia‘s finance ministry will require e-commerce platforms to collect and pass on an income tax on sales made by small- and medium-sized sellers, according to new regulations published on Monday.
Platforms that meet certain criteria must withhold and pass on a 0.5% tax on sales made by sellers with an annual turnover of between 500 million rupiah to 4.8 billion rupiah ($30,800 to $296,000).
They must also share the sellers‘ information with tax authorities.
The ministry will notify a platform if it meets the criteria, which will be based on site traffic and total transaction value over the past 12 months. While the directive is effective immediately, platforms will be given a month to comply.
Reuters reported exclusively last month on the plan to impose the tax.
The tax office has said the rules are intended to tackle the “shadow economy“.
Indonesia‘s e-commerce association idEA has said its members would comply, but expressed concern over the implementation timeline, with the regulation set to impact millions of sellers.
Indonesia‘s main e-commerce operators include ByteDance’s TikTok Shop and Tokopedia, Sea Limited’s Shopee, the Alibaba-backed Lazada, Blibli and Bukalapak.
Southeast Asia’s largest economy has a booming e-commerce industry, with last year’s estimated gross merchandise value of $65 billion expected to grow to $150 billion by 2030, according to a report by Google, Singapore state investor Temasek and consultancy Bain & Co.
