Government exempts marketplace sellers with annual turnover below Rp500 million from tax collection

The Directorate General of Taxes (DJP) at the Ministry of Finance has clarified the policy on collecting Income Tax (PPh) Article 22 through marketplace platforms. Director General of Taxes, Bimo Wijayanto, stressed that the policy does not target all traders, but includes strategic exemptions to protect small business operators. The government is specifically providing relief for individual online traders with an annual gross turnover of up to Rp500 million. This group is exempt from PPh Article 22 collection to maintain the competitiveness of micro-enterprises. “So, for gross turnover up to Rp500 million a year, we do not collect PPh Article 22. This policy is not intended to burden small business operators,” Bimo said during a press conference on tax collection for Electronic System Trading (PMSE) in Jakarta, Wednesday (1/7). To obtain this exemption, traders must submit a turnover statement to the marketplace platform. As long as total annual sales have not reached Rp500 million, the platform will not deduct tax. However, Bimo reminded that if a trader’s turnover exceeds this threshold during the year, the trader must update their statement. Once the Rp500 million limit is passed, the marketplace will begin collecting a final PPh of 0.5% in accordance with applicable regulations. In addition to the turnover limit for individuals, the DJP has also specified certain transaction categories that are not subject to PPh Article 22 collection through PMSE. This policy is a government measure to create a level playing field between online and conventional traders. Bimo explained that conventional traders have been compliant in fulfilling their tax obligations, so the growth of the digital economy must be balanced with fair regulations. “e-Commerce has grown enormously. We are implementing this income tax to ensure fairness for the nation and state,” he added. As an initial implementation step, the DJP has appointed four major platforms in Indonesia to act as collectors of PPh Article 22 on income earned by domestic traders. This appointment is expected to simplify and integrate tax administration for qualifying traders through the electronic system.