Online Trader Tax Takes Effect 1 July, Here's the Calculation Simulation

Marketplace providers will begin collecting income tax (PPh) from online merchants starting 1 July 2026. This policy is in accordance with the Minister of Finance Regulation (PMK) Number 37 of 2025, which mandates marketplace providers to collect Income Tax (PPh) Article 22 at a rate of 0.5% on the gross turnover of domestic traders transacting on their platforms.

Director of Counselling, Services, and Public Relations at the Directorate General of Taxes (DJP), Inge Diana Rismawanti, confirmed readiness to implement the income tax collection policy for e-commerce from 1 July. However, the DJP is still awaiting the issuance of a decree appointing marketplaces as tax collectors. “Regarding readiness, we have spoken with them (e-commerce), and we have been intensifying efforts since last month. We then asked them to prepare, because the Minister (Purbaya Yudhi Sadewa) has stated it will take effect on 1 July 2026 and he has emphasised it will be effective 1 July,” Inge said during a media briefing.

Inge added that the DJP’s system is ready to be integrated with marketplace systems. However, the DJP is still waiting for the issuance of the decree appointing marketplaces as tax collectors. “The DJP’s system is ready to be connected with their (marketplace) systems, and we have also conducted one-on-one meetings with them. If there are no changes, the Director General of Taxes’ Decree and the appointment will be issued tomorrow (today),” she continued. The DJP is currently awaiting the Director General’s decision regarding today’s e-commerce tax announcement.

The tax rules for e-commerce traders will refer to the income tax provisions in Law Number 7 of 2021 on the Harmonisation of Tax Regulations (UU HPP). For those with turnover not exceeding Rp4.8 billion per year, even if the taxpayer or online merchant uses the MSME final PPh mechanism, they will not be taxed on the portion of gross turnover up to Rp500 million.

According to DJP official Zidni Hudan Said Purnomo, under the HPP Law, the non-taxable income (PTKP) for individuals is Rp54 million per year, equivalent to Rp4.5 million per month. However, this provision applies to net income, not turnover. “In the MSME final PPh scheme, what is taxed is turnover, not profit. Therefore, if an e-commerce seller’s turnover is below Rp500 million per year, according to the latest provisions in Article 7 paragraph (2a) of the HPP Law’s PPh cluster, they are not subject to final PPh,” Zidni wrote.

This means e-commerce sellers are not required to pay MSME final PPh if their annual turnover is below Rp500 million. However, if the turnover exceeds this figure, the entire excess amount will be subject to a final PPh rate of 0.5%. For example, with an annual turnover of Rp600 million, the non-taxable portion is Rp500 million, leaving Rp100 million taxable. The final PPh owed would be 0.5% × Rp100 million, equalling Rp500,000.

Nevertheless, Indonesian tax provisions still offer taxpayers the option to use the general taxation scheme. Individual taxpayers conducting business activities with gross turnover below Rp4.8 billion per year can use the net income calculation norm (NPPN) to determine their net income. The net income can then be reduced by the non-taxable income before applying the Article 17 tariff. Furthermore, if there are tax credits from taxes already withheld or paid, the payable PPh can be reduced by these credits, potentially resulting in underpayment, nil, or overpayment.

Zidni explained that the NPPN is considered a standardised estimate representing the business costs incurred by the taxpayer. The provisions for using NPPN are regulated in Article 14 of the Income Tax Law in conjunction with Director General of Taxes Regulation Number PER-17/PJ/2015 concerning Norms for Calculating Net Income. Alternatively, taxpayers can choose to maintain bookkeeping and deduct their business costs from gross income to calculate net income. Similar to the first option, individual taxpayers can reduce their net income by the non-taxable income. After obtaining the payable PPh figure, taxpayers can also deduct any available tax credits.

Not all online merchants are required to pay tax. To be subject to MSME final PPh, a seller must have turnover exceeding Rp500 million but not exceeding Rp4.8 billion per year for individual taxpayers, and must not have opted to use the general taxation scheme. If the turnover threshold is not met, online traders are exempt from MSME final PPh obligations. However, they must still possess a Taxpayer Identification Number (NPWP) and fulfil reporting requirements.