Article 22 Income Tax Collection on E-Commerce

Article 22 Income Tax Collection on E-Commerce

Google, Temasek, and Bain & Company (2025) noted in their E-Conomy SEA 2024 report that Indonesia’s digital economy is one of the largest in Southeast Asia. With a population exceeding 280 million, widespread internet usage, and an expansive digital infrastructure, Indonesia stands as the biggest digital economy in the Asia-Pacific region.

The report estimated that Indonesia’s digital economy reached USD 76 billion in 2022, growing to USD 80 billion in 2023, and projected to hit USD 90 billion in 2024. By 2030, it’s expected to reach between USD 200 and 360 billion.

Zooming in, the country’s digital economy spans activities such as e-commerce, transport and food delivery, online travel, and online media. In 2023, e-commerce alone was estimated to generate USD 59 billion (around IDR 944 trillion), with USD 65 billion (around IDR 1,040 trillion) projected for 2024 as detailed below:

The graph illustrates the dominance of e-commerce in the digital landscape. Given this proportion, it’s no surprise the government is stepping in to strengthen tax compliance for digital trade.

Through the Minister of Finance Regulation (Peraturan Menteri Keuangan/PMK) Number 37 of 2025, the government regulates the appointment of third parties to collect income tax, and the procedures for collecting, remitting, and reporting income tax on earnings received by domestic traders through electronic trading systems.

Appointment of Third-Party Collectors

Under this regulation, the Minister of Finance may appoint third parties to act as Article 22 income tax collectors, provided they meet either of the conditions: they facilitate transactions in Indonesia with a total value of a specific amount over a 12-month period, or/and they record a number of users or traffic volume exceeding a particular limit within a 12-month period. The Director General of Taxes determines the exact thresholds for transaction value and traffic volume.

Article 22 Income Tax Subjects

Not all traders operating on digital platforms are subject to Article 22 income tax. PMK 37 of 2025 applies only to traders receiving payments through a bank or financial account, and those making transactions using an Indonesian IP address or a local phone number. Additionally, courier and delivery services, insurance companies, and other entities transacting with consumers via digital platforms are also subject to this tax.

However, this provision also stipulates that individual and corporate taxpayers with an income tax exemption certificate (Surat Keterangan Bebas/SKB) are exempt from the income tax collection.

Exemptions to the Article 22 income tax collection also apply to:

• Sales of goods/services by resident individual taxpayers with a gross turnover of less than IDR 500 million.
• Courier/delivery service sales by resident individual taxpayers partnered with ride-hailing or tech-based platforms.
• Sales of goods/services by domestic traders who hold a valid SKB.
• Sales of phone credit and new SIM cards.
• Sales of gold jewelry, gold bullion, imitation jewelry, and gemstones.
• Transfer of land and building ownership rights.

Article 22 Income Tax Collection

The Article 22 income tax rate is set at 0.5% of the gross turnover, based on billing documents and excluding VAT and luxury goods sales tax. Article 22 income tax is considered due when the third party receives the payment.

The amount withheld may be used as a credit toward the trader’s regular income tax or counted as part of their final tax payment, depending on their tax status.

Collection Documentation

Unlike most withholding systems, in terms of Article 22 income tax collection on electronic transactions, the domestic trader is responsible for issuing the tax collection slip (or equivalent invoice), which must include:

1. invoice number and date;
2. name of the third-party platform;
3. domestic trader account name;
4. buyer's name and address;
5. details of goods/services sold, price, and any discount; and
6. amount of Article 22 income tax withheld.

Remittance and Report

As outlined in Articles 14 and 15 of PMK 37 of 2025, third parties appointed as collectors must remit the collected Article 22 income tax and report the remittance in their unified monthly tax return.

This is a brief overview of the Article 22 income tax collection on e-commerce. If you need help, Ideatax is here to assist.

References

Google, Temasek, Bain & Company2024e-Conomy SEA 2024SingaporeGoogle, Temasek, Bain & Company