The Over-the-Top (OTT) industry, widely referred to as digital platforms in Indonesia, has become the backbone of the national digital economy, yet its fiscal contribution still falls far short of the economic value it generates. This study finds that with digital transaction value reaching approximately Rp1,350 trillion, digital tax revenue amounted to only Rp32.32 trillion, producing a digital tax coefficient of 0.27, a figure that reflects a systemic failure to capture digital economic value as state revenue. Furthermore, 77% of digital tax revenue actually originates from VAT on Trade Through Electronic Systems (PPN PMSE), which is ultimately paid by Indonesian consumers rather than by global OTT platform companies themselves.
This imbalance becomes even more apparent when viewed through the regulatory gap that allows global OTT companies to operate in Indonesia without a significant physical presence, despite generating substantial revenue from the domestic market. As one solution, the study recommends adopting the concept of Significant Economic Presence (SEP), a digital taxation paradigm that would allow Indonesia to tax foreign digital companies based on their real economic presence in the market, such as transaction volume, active user numbers, or level of digital engagement, rather than continuing to rely on physical presence (permanent establishment), a concept that is no longer relevant to cross-border business models.
In response to these findings, CELIOS proposes three digital tax levy schemes intended to increase state revenue and ensure a fairer contribution from the OTT industry in Indonesia. The three schemes are a low rate Withholding Tax (WHT) of 1%, a high rate WHT of 3%, and a Digital Universal Service Obligation (USO) of 0.75%. By 2030, the 1% WHT scheme is projected to generate Rp37.42 trillion in digital tax revenue, while the 3% WHT scheme, with a rate only three times higher, is projected to yield up to Rp112.27 trillion. This shows that raising the tax rate has a more than proportional impact on revenue, driven by the continuously expanding revenue base of global OTT platforms. The USO scheme, though carrying the lowest rate of the three at 0.75%, is still projected to generate Rp28.07 trillion by 2030 because its proceeds are earmarked directly for digital infrastructure development in frontier, outermost, and disadvantaged (3T) regions and for strengthening the national digital economy ecosystem.
The study also emphasizes the need to strengthen cross-ministerial governance, harmonize digital tax policy with international trade commitments, and seize the momentum of regional integration through the ASEAN Digital Economy Framework Agreement (DEFA), so that Indonesia can strengthen its bargaining position in negotiating a fair fiscal contribution from global OTT companies.
