Indonesian E-commerce Platforms Plan to Withhold 0.5% Income Tax Starting in November

Indonesia’s PPh Pasal 22 withholding tax policy is scheduled to take effect on November 1, 2026. At that time, four major e-commerce platforms, including Shopee and Lazada, will withhold 0.5% income tax from cross-border sellers with annual sales exceeding IDR 500 million.

This change will directly affect the payouts received by eligible sellers. When calculating prices for the Indonesia marketplace, sellers need to factor in the impact of withholding on the amount actually received and reassess their profit margins in light of their cost structure.

Calculate Payouts and Profits Separately

Platform withholding will reduce the amount sellers receive during the current period, but the effect of the withheld amount on their final income tax liability will also depend on the applicable tax treatment rules. Therefore, when assessing prices and profits, distinguish between the amount paid out by the platform and the final tax liability, and avoid treating the withheld amount directly as an additional cost.

Platform implementation details to monitor include how the sales threshold is defined, the basis for calculating the withheld amount, and how the relevant tax will be handled subsequently. These details will affect sellers’ payout and pricing calculations.