Marketplaces Officially Appointed as Withholder Article 22

The government has issued PMK37/2025, which appoints marketplaces as the parties responsible for collecting Article 22 Income Tax on the sale of goods by domestic sellers. In PMK 37/2025, marketplaces are referred to as Electronic Trading System (PMSE) operators. This policy, effective from June 14, 2025, is an important step to ensure tax compliance in the e-commerce sector.

What is Marketplace Article 22 Income Tax?

Article 22 Income Tax in the context of marketplaces is an advance withholding income tax on sales transactions occurring via digital platforms. Under this new provision, marketplaces are no longer merely intermediaries but are also obliged to:

Withhold Article 22 Income Tax when a transaction is completed
Deposit the tax to the state treasury
Report the withholding to the DGT through the Unification Tax Return
Issue withholding receipts for the sellers or merchants

What Marketplaces Are Required to Withhold?

Marketplace operators will be designated as withholding agents if they meet the following conditions:

1. Using an escrow account

An escrow account is a holding account owned by the marketplace that receives payments from buyers. The funds are temporarily held and then distributed to the sellers after the transaction is finalized.

2. Meeting one or both of the following criteria within 12 months

Transaction value exceeding a certain threshold: A marketplace with total transactions in a 12-month periods exceeding the threshold to be set by the DGT.
Number of visitors or traffic exceeding a certain threshold: A marketplace with annual traffic exceeding a specified limit.

Details on the transaction value and traffic thresholds that will serve as the basis for designation as an Article 22 Income Tax withholding agent will be regulated further through a regulation issued by the Director General of Taxes. As a reference, the Directorate General of Taxes previously applied similar criteria for appointing foreign businesses to collect VAT.

According to Article 4 of PMK 60/PMK.03/2022, a marketplace or foreign business may be appointed as a VAT collector if within 12 months it:

Has transaction value with Indonesian buyers of IDR 600 million or more, or
Has 12,000 or more annual visitors (traffic).

These criteria can serve as an initial reference to understand the approach that is likely to be used in setting the Article 22 Income Tax thresholds for domestic and foreign marketplaces.

Read Also: Marketplace to Withhold Taxes on Merchant Sales

Exemptions from Withholding by Marketplaces

According to Article 10 of PMK 37/2025, there are six transaction conditions exempted from withholding. Marketplaces do not withhold Article 22 Income Tax under these circumstances, even if generally appointed as withholding agents. The exemptions include:

Sale of goods or services by individual taxpayers with annual turnover up to IDR 500 million. Merchants must submit a turnover statement to the marketplace.
Provision of delivery or expedition services by individual taxpayers. For example, rideshare drivers partnering through apps.
Sale of goods or services by merchants holding a tax exemption certificate for withholding or collection of income tax. This letter must be submitted according to Article 6(3).
Sales of prepaid credit (pulsa) and starter packs.
Sales of gold jewelry, gold bars, non-gold jewelry, gemstones, or similar items. The exemption applies if the transaction is carried out by manufacturers, merchants, or bullion traders.
Transfer of rights to land and/or buildings or agreements binding the sale and purchase of land and buildings and any amendments thereof.

For all the above transactions, the tax obligations remain with the seller. They must carry out withholding, payment, and reporting in accordance with applicable tax regulations.

Policy Implementation and Impact

PMK 37/2025 is a milestone in tax governance in the digital commerce era. Marketplaces now play a strategic role in ensuring transaction transparency and merchant tax compliance. With proper systems and risk management readiness, this policy can be implemented effectively.

On July 15, 2025, the Indonesian E-Commerce Association (idEA) also announced that the association is proposing a one-year transition period to allow digital platforms to adapt. According to idEA, this policy does not actually create a new tax burden for merchants, as it only transfers the withholding obligation from the merchants to the marketplace. However, implementing the new requirements still presents various administrative and technical challenges in practice.