INSPIRED VOL.4/SEPTEMBER 2026:
SUSTAINABILITY DISCLOSURE STANDARDS
AND WITHHOLDING TAX IN THE DIGITAL ECONOMY
STANDARD UPDATES & TAX ALERTSNavigating ISRS 1 and ISRS 2: Key Requirements and Practical Implications
and Withholding Tax in the Digital Economy: Understanding PMK 37/2025
At a glance
This publication provides an overview of PSPK 1 and PSPK 2, Indonesia’s sustainability disclosure standards aligned with the ISSB’s IFRS S1 and IFRS S2. It outlines the core principles of sustainability reporting, including governance, strategy, risk management, financial materiality, and metrics and targets, as well as the requirements and implementation timeline effective 1 January 2027. The article also highlights climate-related disclosure requirements under PSPK 2 and examines the implications for entities and auditors as sustainability reporting becomes increasingly important to transparency and accountability.
In addition, the publication discusses PMK 37/2025, which introduces a new withholding tax mechanism for digital marketplace transactions by appointing platform operators as withholding tax agents. The article explains the key provisions, MSME exemptions, compliance requirements, and potential sanctions, while outlining the regulation’s role in simplifying tax administration, improving compliance, and supporting a fairer digital business environment.
PSPK 1 and PSPK 2: New Direction for Sustainability Disclosure Regulations in Indonesia
The Institute of Indonesia Chartered Accountants (IAI) has issued the Statement of Sustainability Disclosure Standards (PSPK), aligned with the International Sustainability Standards Board (ISSB). PSPK 1 sets the general requirements for disclosure of sustainability-related financial information, while PSPK 2 governs climate-related disclosures. Both standards were ratified on 1 July 2025 and take effect in Indonesia on 1 January 2027, with early adoption permitted.
The obligation applies to all industry players under OJK supervision, including financial services institutions, issuers, public companies and financial infrastructure players, as set out in the revised POJK 51/2017. PSPK follows the ISSB’s financial materiality approach and requires connected information, so that governance, strategy, risk management, and metrics and targets link clearly to the financial statements. In the first three years, entities may focus on climate-related risks and opportunities and are not yet required to disclose Scope 3 GHG emissions. For auditors, the standards bring a growing role in providing assurance over sustainability information, including GHG emissions data.
PMK 37/2025: Withholding Tax in the Digital Economy
PMK 37/2025 appoints Commerce Through Electronic System Providers (PPMSE), meaning local marketplaces and digital platforms that facilitate trade transactions, as withholding agents for Income Tax on income received by domestic sellers. The regulation does not create a new tax or raise tax rates. It changes only the collection mechanism, shifting from self-assessment by merchants to direct withholding by the platform.
Individual sellers whose cumulative turnover in a fiscal year has not exceeded IDR 500 million are exempt from withholding, and deduction only begins on transactions after that threshold is passed. Platforms must provide identity verification (TIN/NIK) and track annual accumulated sales. Invoices and monthly transaction summaries issued by the platform are treated as withholding tax slips and flow into the DGT’s Coretax system, so sellers can use them directly as tax credits in their Annual Tax Return. Platforms that fail to withhold, remit or file are subject to sanctions under Article 16. Read together with PP 20/2026, the regulation simplifies tax collection in the digital sector and restructures MSME tax incentives.
