Compliance
Compliance Deep Dive: Indonesia’s Foray into Simplified Tax Refunds & Online-Merchant Withholding
Recent regulatory changes in Indonesia are reshaping compliance expectations: early refunds, stronger oversight, and marketplaces acting as tax collectors.
By NomadicTax Research Team • 6-7 min read • August 31, 2026
## Indonesia’s New Tax Refund Regime: PMK-28/2026
On **1 May 2026**, Indonesia enacted **PMK-28/2026**, which changes the **Tata Cara Pengembalian Pendahuluan Kelebihan Pembayaran Pajak** (procedures for early refund of overpaid taxes). ([pajak.go.id](https://www.pajak.go.id/index.php/id/siaran-pers/pmk-nomor-28-tahun-2026-terbit-perkuat-kepatuhan-dan-kepastian-pengembalian-pajak?utm_source=openai)) Key features:
- **Automatic eligibility categories**: compliant taxpayers with certain profiles—formal compliance, clean tax history, no previous criminal record in tax matters—can apply for refunds without full audits. ([pajak.go.id](https://www.pajak.go.id/index.php/id/siaran-pers/pmk-nomor-28-tahun-2026-terbit-perkuat-kepatuhan-dan-kepastian-pengembalian-pajak?utm_source=openai))
- **Specified timeframes**: the regulation mandates timelines for processing, somewhat faster than the older system.
- **Targeted scope**: includes overpayment scenarios due to input VAT, luxury goods tax, or overwithheld taxes. The rule emphasizes low-risk taxpayers.
**Actionable Compliance Tip**: If you're in Indonesia and expect overpaid tax, ensure your filings are clean (no late returns, no past violations), because that determines whether you get to use the fast refund route.
## Marketplace Withholding on Income Tax Article 22
Starting **1 August 2026**, digital marketplaces in Indonesia (Tokopedia, Shopee, Lazada, Blibli) are required to withhold **Income Tax Article 22** on sales by domestic merchants using their platforms. ([pajak.go.id](https://pajak.go.id/en/artikel/not-new-tax-dgt-collaborate-marketplaces-simplify-online-merchants-tax-mechanism?utm_source=openai))
- **What that means**: Instead of each merchant doing self-remittance, the marketplace deducts the tax upfront per transaction.
- **Why it matters**: Simplifies compliance for small sellers, but requires awareness because amounts withheld reduce cash flow.
## Enforcement & Administrative Tightening under UMKM Policies
Per **PP 20/2026**, the government redefined eligibility for final PPh 0.5% rates for UMKM, limiting it to individuals, single-person PTs, and cooperatives with turnover ≤ Rp 4.8 billion. Entities that previously benefited but now excluded must transition to the general corporate tax framework. ([pajak.go.id](https://pajak.go.id/en/node/119950?utm_source=openai))
- Firms with turnover near threshold need better forecasting to avoid unpleasant surprises.
- Keep clear books so that taxable income and turnover are verifiable.
## Implications for Businesses & Best Practices
- **Cash flow impact**: With new marketplace withholding, plan for reduced net proceeds; sellers may need to pre-price considering the withheld amounts.
- **Audit risk lower for compliant taxpayers**: Under PMK-28/2026, lower risk of full audit for those with clean tax records who apply for refunds.
- **Documentation is key**: Maintain accurate invoices, proof of expenses, transaction records especially when transitioning from final tax regimes.
- **Update contracts and invoices**: Ensure marketplaces issue invoices reflecting withholding; ensure tax agents/bookkeepers are updated.
## Example Compliance Workflow
A small creative agency on Shopee earns Rp 100 million/month (Rp 1.2 billion/year), under the Rp 4.8 billion threshold.
\- Prior to August 2026: agency remitted their own PPh Article 22; after Aug 1, marketplace deducts it.
\- When expecting VAT overpayments, ensure agency qualifies under PMK-28, submit early refund request with necessary supporting documents.
## Conclusion
Indonesia’s recent tax compliance reforms—from expedited refunds to marketplace withholding—reflect broader moves in ASEAN to tighten enforcement while simplifying where possible. For businesses: stay current, keep clean tax records, and integrate compliance planning (not just reporting) into your operations.