The Indonesian government has introduced a new regulation requiring e-commerce platforms such as Tokopedia, Shopee, Bukalapak, TikTok Shop, Lazada, and Blibli to collect income tax (Pajak Penghasilan or PPh) from online merchants selling on their platforms. This rule, formalized under PMK Nomor 37 Tahun 2025 and effective from July 14, 2025, mandates marketplaces to withhold a final income tax of 0.5% on the gross turnover of merchants with annual revenues between Rp 500 million and Rp 4.8 billion. The Directorate General of Taxes (DJP) clarified that this is not a new tax but a change in the collection mechanism, shifting the responsibility of tax withholding from merchants directly to the e-commerce platforms. The government aims to enhance tax compliance and target the shadow economy through this measure. Additionally, there is consideration to extend tax collection responsibilities to foreign marketplaces hosting Indonesian sellers. Following the implementation for e-commerce platforms, the Ministry of Finance plans to expand tax collection efforts to social media and digital data sectors starting in 2026, utilizing analytics and social media monitoring as part of tax administration reforms. E-commerce companies have requested adequate preparation time for compliance with the new regulations.