Digital tax revenue in Indonesia has shown a steadily positive trend. As of Jul. 31, 2025, the Directorate General of Taxes recorded revenue of Rp40.02 trillion, with the largest contribution coming from Value Added Tax on Trade Through Electronic Systems (PMSE VAT), which reached Rp31.06 trillion or about 77.6 percent.
This figure highlights the significant role of the digital economy in supporting state revenue while also opening space for discussion on strategy, fairness, and the challenges that remain.
“The digital base will continue to grow and provide additional space for state revenue, but future strategies must focus on expanding the PMSE VAT collection base and integrating digital tax into the broader national taxation system,” said Dr. Rijadh Djatu Winardi, a lecturer at the Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), on Tuesday (Sep. 2).
Dr. Winardi noted that the outlook for digital tax revenue remains strong in line with the growth of digital economic transactions in Indonesia. However, he reminded that the government should also consider macroeconomic conditions since overall tax revenue had only reached 45 percent of the target by mid-August 2025.
The growth in PMSE VAT reflects rising digital consumption, consistent with the projected Gross Merchandise Value of Indonesia’s digital economy, estimated to reach USD 110 billion this year.
“In terms of trend, PMSE VAT is increasing, which indicates that digital consumption continues to grow in line with the positive projections of Indonesia’s digital economy,” he explained.
He added that digitalizing the taxation system is key to the success of digital tax collection. The implementation of the Core Tax Administration System (Coretax) has made processes more efficient while providing broader access to data.
Coretax also allows tax authorities to monitor business classifications and annual revenue in greater detail. The system simplifies administration by enabling electronic notifications and, with the support of data analytics, allows the government to identify transaction patterns and potential risks more accurately.
“Coretax holds an essential role in ensuring that PMSE VAT is implemented more effectively, transparently, and sustainably, supported by data analytics and big data analysis,” he said.
The policy of appointing marketplaces as collectors of the 0.5 percent final income tax (PPh Final) for online MSMEs was also considered an appropriate measure to address fiscal equality.
This is not a new tax, but rather a change in mechanism that simplifies administration and facilitates online traders. At the same time, the policy is viewed as capable of encouraging greater voluntary compliance among business actors.
Dr. Winardi emphasized that individual traders with an annual turnover of less than Rp500 million remain exempt under this scheme, so small businesses need not worry. He explained that the mechanism helps create a level playing field between online and offline businesses, ensuring fairer fiscal treatment.
“The response from business actors has been relatively positive because the collection mechanism through marketplaces is considered more practical and encourages compliance without adding significant burdens,” he said.
Furthermore, the government is also working to expand the digital tax base beyond the e-commerce sector. Fintech, crypto assets, and other digital services have become new sources of revenue that continue to be strengthened through regulation and oversight. These efforts are essential to safeguard fiscal space amid the rapid growth of the digital economy.
Dr. Winardi pointed to the issuance of Ministry of Finance Regulation 37/2025 as a solution to many online transactions that had previously fallen outside traditional tax mechanisms.
He also highlighted the issuance of Ministry of Finance Regulation 50/2025 for the crypto sector as a government response to industry feedback, providing clearer rates and stronger legal certainty.
“With this policy, crypto businesses are more confident about operating domestically because the rates are clearer and the administration is simpler,” he said.
He further stressed the importance of digital tax in supporting fiscal sustainability. With a policy design that is simple, transparent, and fair, the state’s revenue base can be expanded without raising rates.
This approach ensures equality among large enterprises, MSMEs, and digital economy actors. It also minimizes potential revenue leakage while strengthening voluntary taxpayer compliance.
He cited the replacement of VAT on crypto transactions with a final income tax as an example of how tax policy can adapt to the dynamics of the digital industry.
“Digital tax expands the state’s revenue base, ensures fiscal fairness, and secures fiscal space to support development financing,” Dr. Winardi remarked.
Nevertheless, several challenges still need to be addressed by the government. Issues of compliance, the shadow economy, and low tax awareness among digital players remain significant.
Therefore, future strategies must focus on strengthening systems, broadening the tax base, and improving literacy and public awareness.
Dr. Winardi emphasized that international cooperation must also be strengthened to safeguard Indonesia’s tax rights amid the complexity of global regulations.
He added that public education should be carried out more creatively so that messages about the importance of taxation are well received by all segments of society.
“Building public awareness through education, simplified regulations, and transparent processes is crucial to ensure that digital tax revenue continues to grow sustainably,” he concluded.
Author: Triya Andriyani
Post-editor: Rajendra Arya Arifadi
Photograph: FEB UGM