Between May and July 2025, Indonesia introduced major reforms to strengthen e-commerce and digital tax collection. PERPRES-68/2025 creates a state-backed system to collect VAT on overseas digital sales, PMK-37/2025 appoints qualifying domestic and foreign platforms (PPMSE) as Article 22 income tax collectors with a 0.5% withholding on sellers’ revenue, and PER-12/2025 tightens VAT reporting and remittance rules. The measures expand the tax base, prevent double taxation, and improve cross-border compliance. Platforms must upgrade systems for monthly reporting, and sellers must provide documentation to avoid unnecessary withholding.
Indonesia Reforms Digital Tax Collection for E-commerce
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Author: Ljubica Blagojević
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Content accuracy validation date:
02.10.2025
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From May to July 2025, Indonesia issued three main regulations to strengthen tax collection on e-commerce and digital transactions:
- PERPRES-68/2025: Creates a state-backed system to collect VAT on overseas digital transactions
- PMK-37/2025: Appoints domestic or foreign electronic platform providers (PPMSE) meeting transaction/user thresholds as Article 22 Income Tax Collectors for domestic sellers.
- PER-12/2025: Updates rules for VAT collection on PMSE (electronic commerce) to align with PMK-81/2024, replacing PER-12/2020.
Main Aspects of PMK-37/2025 – Article 22 Income Tax Collection
- Who is Appointed: Domestic/foreign PPMSE using escrow accounts and meeting thresholds (≥ IDR 600M annually or 12k visits from Indonesia).
- Tax Rate: 0.5% of gross revenue (excl. VAT/LGST) collected and remitted monthly, reported in a unified income tax return.
- Seller Obligations: Provide NPWP/NIK and turnover notifications; small taxpayers (< IDR 500M annual turnover) may be exempt if they submit required letters.
- Exemptions: Certain low-turnover individuals, transport partners, exempted sellers, top-up vouchers, jewelry sales, and land/building transfers.
- Creditability: Tax is creditable against seller’s income tax; excess may be refunded. Prevents double taxation by overriding Article 4(2) & Article 15 withholding rules.
Main Aspects of PER-12/2025 – VAT Collection
- Terminology: Replaces “PMSE VAT collector” with “other party.”
- Appointment & Revocation: Appointment effective from the month after issuance; revocation possible ex-officio or at the other party’s request.
- Reporting & Proof: Other party must remit VAT monthly, submit detailed transaction reports (proof number, amount, buyer’s data). Foreign collectors may remit in USD; domestic collectors use IDR. Overpaid VAT may be offset or refunded depending on status.
- Customer Self-Assessment: Required if no VAT collector is appointed.
PERPRES-68/2025 – Digital VAT Collection System
Mandates to develop a technology-based system for collecting VAT on overseas digital transactions. Implementation begins after a partner is appointed.
NPWP vs. NIP
Indonesia now issues NIP for non-resident entities or individuals performing limited tax functions (e.g., foreign platforms, international organizations). Domestic taxpayers continue using NPWP.
These reforms mark a significant step in Indonesia’s digital tax modernization, requiring domestic and foreign platforms to act as VAT and income tax collectors. The rules expand the tax base, improve cross-border compliance, and standardize procedures. Platforms must rapidly update systems for strict reporting to avoid penalties, while sellers need to track turnover thresholds, maintain documentation, and submit exemption letters on time to prevent unnecessary witholding.
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