The Indonesian government continues to strengthen its tax system in the digital economy era, one of which is by issuing of Ministry of Finance Regulation Number (PMK) 37 of 2025. This regulation requires the appointment of other parties to collect the Article 22 Income Tax (PPh) on income earned by Domestic Taxpayers ( or PDN’s) conducting transactions through Electronic-Based Trading Systems (PMSE). In other words, trade in electronic systems is not only subject to VAT, but also Article 22 Income Tax. The purpose of this policy is to create fairness and improve tax compliance in the growing digital sector. In this provision, the Minister of Finance may appoint other parties as collectors of the Article 22 Income Tax, and the authority may be delegated to the Director General of Taxes. The appointment applies to both PMSE organizers domiciled inside and outside the territory of Indonesia.
Other parties that may be appointed must meet certain criteria, namely that the transaction uses an escrow account with a total transaction value exceeding a certain amount and the number of accesses exceeds a certain limit within 12 months. The transaction value and number of access limits are explained and determined in PER 15 of 2025. In PER 15 of 2025, the specific limits include transaction values involving the use of goods/services exceeding IDR 600 million over a one-year period or IDR 50 million over a one-month period, as well as the number of customers exceeding 12,000 over a one-year period or 1,000 over a one-month period. In this context, PDN refers to individuals or entities that receive income through bank accounts or similar financial accounts and conduct transactions using an Indonesian IP address or phone number. This category includes shipping companies, insurance companies, and other parties that sell goods/services through PMSE.
PDN’s are required to submit information such as their Taxpayer Identification Number (NPWP) or National Identification Number (NIK), and correspondence address. In addition, there is some additional information that needs to be conveyed by the PDN, depending on the gross income received by the PDN, namely:
- Revenue ≤ IDR 500 million: Must submit a statement letter declaring gross income under IDR 500 million.
- Revenue > IDR 500 million: Must submit a gross income statement letter no later than the end of the month in which the gross income exceeded IDR 500 million.
- Have an Exemption Certificate (SKB): Must submit the exemption certificate.
Other parties are required to collect the Article 22 Income Tax on PDN income from PMSE transactions. The withholding rate is 0.5% of gross Income as stated on the invoice (excluding VAT and luxury goods sales tax). The withholding is conducted when payment is received by the other party. Article 22 Income Tax collected can be calculated as tax payment in the current year for PDN who receive non-final income tax or final income tax payment for PDN who receive final income tax (gross income <Rp. 4,800,000,000). If there is a difference in underpayment related to the collection of Article 22 Income Tax, the PDN must paid the tax underpayment, for example:
If there is a difference in excess of the Article 22 Income Tax, then a request for a refund of the excess tax that should not be owed can be submitted in accordance with tax regulations through Coretax system.
Furthermore, there are several transaction types that are excluded from the other party to collect the Article 22 Income Tax, including:
- Sales by individual taxpayers with revenue ≤ IDR 500 million who have submitted a statement letter.
- Expedition services from individuals as partners of technology-based application companies that provide transportation services.
- Sales by PDN’s holding a SKB (exemption certificate).
- Sales of phone credit, SIM cards, jewelry, gold bars, gemstones, and land/building rights.
Nevertheless, for these transactions, income tax is still due and must be fulfilled through other mechanisms.
PDN’s must issue invoices in their own name via the other party’s electronic system. The invoice must contain: number and date, PDN name, PDN account, buyer identity, details of goods/services, price, and withheld tax amount. This document is considered proof of the collection of Article 22 Income Tax. In case of errors or cancellations, PDN’s must issue correction or cancellation documents referencing the original invoice. These must also be issued through the other party’s system and are recognized as withholding proof.
Other parties must remit the withheld tax to the state treasury for each tax period. They must also report:
- PDN name, account, and country.
- NPWP/tax ID and correspondence address of the other party.
- Buyer’s email address or phone number.
- Invoice and correction/cancellation document details.
- Total withheld and remitted Income Tax Article 22.
The implementation of PMK 37 of 2025 certainly brings its own risks for taxpayers, especially PDN’s. With the new obligation to submit information and the potential for automatic collection by other parties, merchants need to be more careful in managing their tax administration. If the gross income declaration letter or withholding exemption statement is not submitted on time, income tax collection can still be conducted even though it should be exempted. This can lead to tax overpayments that require the submission of a refund of the excess tax that should not be owed, or even lead to underpayments that must be remitted. In addition, increased transparency and digital reporting from platforms to tax authorities have the potential to increase scrutiny of every transaction. Therefore, understanding and complying with this provision is important so that businesses do not face unwanted administrative or financial risks.
PMK 37 of 2025 expands the scope of digital taxation regulations that have previously been regulated in Minister of Finance Regulation Number PMK 210 of 2018 and Minister of Finance Regulation Number PMK 48 of 2020 and their derivative regulations. If PMK 210 of 2018 emphasizes more on the tax treatment of e-commerce in general, and PMK 48 of 2020 focuses on VAT collection on PMSE, then PMK 37 of 2025 becomes a breakthrough by establishing a mechanism for collecting Article 22 Income Tax by other parties (such as digital platforms) on domestic merchants. This policy also sets a gross income limit as the basis for exemption from collection, introduces a digitalization system for proof of collection, and requires more detailed data reporting. This reflects the government’s efforts to adjust tax policies to the evolving dynamics of digital transactions.
For further information and taxation queries, please reach to :
Email : info@mul-co.com
WA : +62 82249384918
