Government Officially Appoints Marketplaces to Collect Income Tax Article 22 from Online Merchants

The government has officially designated marketplaces as entities authorized to withhold Income Tax Article (ITA) 22 from domestic merchants who sell goods and services through such platforms.

This mandate is outlined in Minister of Finance Regulation (PMK) Number 37 of 2025, which was issued and became effective on June 14, 2025.

Under this regulation, the authority to withhold is not limited to marketplaces based in Indonesia, but also includes marketplaces located outside the territory of the Republic of Indonesia.

Below are several additional provisions stipulated in the regulation.

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Criteria for Marketplaces Authorized to Withhold Tax

The term marketplace in this regulation refers to Electronic-Based Trading System (PMSE) operators that meet certain thresholds of transaction value and number of visitors or traffic.

However, the specific thresholds for transaction volume and traffic are not specified in the regulation itself. These will be determined by the Director General of Taxes (DGT).

Another key criterion for marketplaces authorized to withhold Income Tax Article (ITA) 22 is the use of an escrow account to hold income received from online merchants.

Once a marketplace meets these criteria, the DGT will formally designate it as a withholder of ITA 22.

Criteria for Online Merchants Subject to ITA 22 Withholding

The following are criteria for domestic online merchants whose income may be subject to Income Tax Article (ITA) 22 withholding by the marketplace:

1. Individuals or entities (legal persons) receiving income through a bank account or other types of financial accounts.
2. Conduct transactions using an Internet Protocol (IP) address located in Indonesia or a telephone number with an Indonesian country code.
3. Include courier or delivery service companies, insurance companies, and other parties conducting transactions through Trade Through Electronic Systems (PMSE).
4. Have a gross revenue exceeding IDR 500 million within the current fiscal year.

Obligations of Online Merchants Who Meet the Criteria

Online merchants who meet the specified criteria are required to:

1. Submit their Tax Identification Number (Tax ID) or the Population Identity Number (NIK) to the marketplace.
2. Provide their correspondence address to the marketplace.
3. Submit a written statement declaring that their turnover exceeds IDR 500 million up to IDR 4.8 billion within one tax year.
4. Be responsible for the accuracy of the information submitted.

Mechanism for Withholding Income Tax Article (ITA) 22 from Online Merchants

The mechanism for withholding ITA 22 by the marketplace is as follows: First, for each income received by online merchants who meet the criteria, the marketplace will withhold ITA 22.

Second, if the merchant submits a notification indicating that their revenue exceeds IDR 500 million, then the ITA 22 withholding will begin at the start of the following month.

Third, the amount of ITA 22 withheld from online merchants with annual revenue between IDR 500 million and IDR 4.8 billion is 0.5% final.

Fourth, if the income received by the online merchant is subject to final income tax under ITA 4(2) or ITA 15 of the Income Tax Law, then the ITA 22 withheld is considered a prepayment toward the final income tax due.

In cases where the ITA 22 amount withheld is less than the final tax liability as stipulated by prevailing tax laws, the merchant may pay the shortfall independently. Conversely, if the amount withheld exceeds the tax liability, the difference may be claimed as a refund (restitution).

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Payment of Income Tax Article (ITA) 22 by Marketplaces

Marketplaces are required to remit the withheld Income Tax Article (ITA) 22 from merchants to the Directorate General of Taxes (DGT) for each tax period. In conjunction with the payment of ITA 22, marketplaces must also submit the Monthly Income Tax Return Unification (SPT Masa PPh Unifikasi) to the DGT.

The Monthly Income Tax Return Unification must be submitted with supporting attachments, including the merchant’s Tax Identification Number (Tax ID), correspondence address, and a written statement from the merchant declaring either revenue up to IDR 500 million or above IDR 500 million.

Additionally, the following information must also be provided: the merchant’s name, account name, country of origin, the marketplace’s Taxpayer Identification Number (TIN), the marketplace’s correspondence address, and the email address or telephone number of the marketplace.

Including Online Motorcycle Taxis (ojek online/ojol): Online Merchants/Service Providers Exempt from ITA 22 Withholding

The following are several conditions under which online merchants or service providers are not subject to Income Tax Article (ITA) 22 withholding by marketplaces, including providers of online transportation services such as ojol:

1. Merchants with annual revenue below IDR 500 million within the current year.
2. Courier/delivery services provided by individuals who are partners of app-based companies.
3. Merchants who submit a certificate of exemption from income tax withholding/collection.
4. Sales of mobile phone credit and starter SIM cards.
5. Sales of gold jewelry, gold bullion, jewelry made entirely of non-gold materials, precious stones, and similar gemstones, conducted by gold jewelry manufacturers, gold jewelry traders, and/or gold bullion dealers.
6. Transfer of rights over land and/or buildings, including sale and purchase agreements and any amendments thereof.

Although these transactions are not subject to ITA 22 withholding by marketplaces, they are still subject to income tax. The withholding and reporting obligations must be carried out under the applicable tax regulations.

Merchants Required to Issue Electronic Invoices

Under this regulation, each online merchant is required to issue an invoice document for the sale of goods or services conducted through Electronic-Based Trading Systems (PMSE). The invoice must be issued in the name of the merchant and generated electronically through the system provided by the marketplace.

The invoice must contain at least the following information:

1. Invoice number and date,
2. Name of the other party,
3. Account name of the Domestic Merchant,
4. Buyer identification, including name and address,
5. Type of goods and/or services, quantity, selling price, and any discounts, and
6. Income Tax Article (ITA) 22 amount applicable to each Domestic Merchant.

Conclusion

The government has appointed marketplaces as withholding agents under Income Tax Article (ITA) 22 for domestic online merchants. This provision applies to merchants with annual revenue exceeding IDR 500 million. Several categories are exempt, but they are still required to fulfill tax reporting obligations in accordance with prevailing regulations. (ASP/KEN)