Indonesia Implements New E-commerce Tax for SMEs

On July 14, 2025, Indonesia mandated e-commerce platforms to withhold and remit a 0.5% income tax on sales by small- and medium-sized sellers earning 500 million to 4.8 billion rupiah annually (€29,400 - €282,400). Platforms must also report seller data to tax authorities. The rule targets platforms exceeding certain traffic and transaction thresholds, with a one-month compliance window. Aimed at addressing the shadow economy, the regulation has raised concerns from the e-commerce association (idEA) due to its impact on millions of sellers.

The requirement applies to platforms that meet thresholds based on site traffic and transaction volume over the past year. Though the rules take effect immediately, platforms have a one-month grace period to comply.

The regulation aims to curb Indonesia’s "shadow economy" by increasing tax compliance in the rapidly expanding digital sector. However, the local e-commerce association (idEA) voiced concerns about the tight timeline, given the rule's potential impact on millions of sellers.

With Indonesia’s e-commerce market valued at $65 billion in 2024 and projected to reach $150 billion by 2030, this move signals the government's push to ensure tax collection keeps pace with digital growth.