By: Winna Nartya
Indonesia’s digital economy is approaching its peak, with its value projected to reach US$146 billion by 2025. However, without an adaptive taxation framework, potential revenue from this sector risks being wasted. The Directorate General of Taxes (DJP) at the Ministry of Finance has identified the urgent need to formulate new regulations clarifying tax obligations on digital transactions. As a strong supporter of this initiative, I see several key reasons why regulations must align with the dynamics of the digital ecosystem.
In the digital era, regulatory transparency is essential. Rosmauli, Director of Counseling, Services, and Public Relations at DJP, stated that the proposed regulations will specify which digital services are taxable, how taxes should be collected, and what documentation is required from businesses. When businesses clearly understand what they need to collect and report, their incentive to comply will increase. Legal certainty not only reduces administrative burdens but also strengthens investor and consumer trust in a healthy digital business climate.
Value-added tax (VAT) collections from digital goods and services (PMSE) have reached nearly IDR 35 trillion as of March 2025, yet this remains far below its potential. Ariawan Rahmat, Executive Director of the IEF Research Institute, argues that the current appointment threshold for PMSE VAT collectors—IDR 600 million per year—is too high, leaving many small and medium-sized players untapped. By lowering this threshold (for example, to IDR 200–300 million), tax revenue from micro-digital businesses could be more broadly captured. This would also promote tax inclusion while easing the VAT burden on the smallest enterprises.
Shifts in digital consumer behavior have turned social media into a new economic channel. The government plans to tax content monetization by creators, influencer endorsements, and foreign over-the-top (OTT) digital service providers starting in 2026. Finance Minister Sri Mulyani Indrawati explained that DJP will utilize data analytics technology to monitor transactions on platforms like YouTube and TikTok. This approach smartly leverages digital footprints (likes, views, and microtransactions) as income indicators. Success hinges on protecting personal data and collaborating with global platforms for real-time data access.
Regulation is just the foundation; execution requires digital infrastructure. DJP has developed an integrated, AI-based, geotagging taxation system known as Coretax. Vincentius Sukamto, Head of Counseling at DJP East Java III Regional Office, explained that Coretax simplifies digital taxpayer registration (NPWP), enhances data accuracy, and accelerates tax base expansion. With AI, DJP can analyze digital transaction patterns to flag high-risk taxpayers and issue early warnings. This integration demands upskilling DJP personnel to operate and maintain sophisticated systems.
IEF Research highlights four digital subsectors holding large untapped tax potential. First, cryptocurrencies—which, despite being subject to VAT and income tax (PPh), suffer from low compliance—require a withholding tax mechanism at exchanges to ensure effective collection. Second, peer-to-peer (P2P) lending, which contributed about IDR 3.28 trillion by March 2025, could serve as a taxation model for other fintech subsectors like insurtech and wealthtech. Third, the gig economy—from freelancers to ride-hailing services—could contribute between IDR 28 trillion and IDR 75 trillion annually if subjected to 5–10% income tax, though enforcement remains a challenge. Fourth, AI services are the next frontier in the digital economy, and tax authorities must begin mapping this sector to avoid missing potential revenue. In each subsector, regulations must be tailored—such as taxing smart contracts in crypto or applying withholding tax to P2P lending platforms.
The main challenge is not just technical but lies in digital tax literacy. Indonesia’s digital literacy index stands at just 62% (INDEF 2023), and financial literacy at 65% (OJK 2024). DJP should therefore collaborate with fintech companies, digital MSME associations, universities, and tax centers to provide practical educational programs. Such collaboration can extend outreach to coders, marketplace sellers, and content creators.
Digital transformation also opens opportunities for the emerging profession of “taxologists”—tax consultants skilled in data analytics. Vaudy Starworld, Chair of IKPI, notes that taxologists will become the frontline advisors for digital taxation, combining regulatory expertise with technological capabilities. The government can support this through specialized accreditation and AI training scholarships for taxologists.
Responsive digital economy tax regulations, AI-driven infrastructure, and strengthened human resource capacity are the pillars for integrating digital taxes into the state budget. The government, through DJP, is moving in this direction—providing legal certainty, lowering collector thresholds, targeting social media, and building Coretax. This effort must be supported by all parties: regulators, fintech players, academics, and taxpayers. With synergy, digital taxes will not be seen as a burden but as a solid financial foundation to fund Indonesia’s development in the super-digital era.
*) Digital Finance Observer
