June 3, 2026 | 01:12 pm
TEMPO.CO, Jakarta - The Center of Economic and Law Studies (Celios) has pointed out that tax revenue from the global Over-the-Top (OTT) industry, including giants like Google and Meta, remains disproportionate to the trillions of rupiah generated in local revenues."When ads are aired in Indonesia, the tax revenue flows to Singapore, because the headquarters of Google, Meta, and other tech giants are located there, not in Indonesia," Celios Director of Digital Economy, Nailul Huda, said during a discussion of the study's findings in Jakarta on Tuesday, June 2, 2026.Huda raised the issue while presenting a Celios study on the governance of the OTT industry in Indonesia. In its findings, Celios noted that the digital transaction value, or Gross Merchandise Value (GMV), of global OTT platforms in Indonesia reached Rp1,350 trillion in 2024. However, the digital sector's tax contribution ratio to the national digital economy stands at only 0.27 percent.According to Huda, these minimal revenues persist because digital taxation still heavily relies on Value Added Tax on Electronic Commerce (e-Commerce VAT). Consequently, the actual tax burden of the OTT industry is largely borne by Indonesian consumers, rather than the platforms themselves.Beyond shifting the tax burden to consumers, Huda noted that the low revenue yield stems from the fact that global OTT platforms do not operate as a Permanent Establishment (PE) or maintain a physical office in Indonesia. "When we ask Google to pay its fair share of taxes, they feel that since they don’t have an office here, why pay taxes?" Huda said.Nevertheless, Huda asserted that Indonesia already possesses regulations mandating these platforms to register as a local PE, specifically under Law Number 2 of 2020 on Job Creation. This regulation, he explained, provides a legal framework to levy taxes based on Significant Economic Presence (SEP) for foreign taxpayers who maintain a strong economic reliance on Indonesia without having a physical office.To measure the economic footprint of these OTT platforms, Huda believes the government must implement a threshold based on user base, transaction volume, or advertising revenues. He pointed to recommendations from the Organisation for Economic Co-operation and Development (OECD), which suggests a minimum 15 percent tax rate for global OTT platforms generating at least Rp13 trillion annually in global revenue, Rp10 trillion in net profits, and a minimum revenue of Rp500 billion within Indonesia. Under such a framework, global OTT platforms holding a dominant market share in Indonesia would be legally required to pay their dues.Huda concluded by revealing that Celios has formulated three policy scenarios for digital taxation in Indonesia. These models include a 1 percent withholding tax (WHT), a 3 percent WHT, and a 0.75 percent Universal Service Obligation (USO) levy. Several nations, including South Korea, Turkey, and members of the European Union, have already adopted similar levy schemes to maximize state revenues and foster a healthier domestic digital industry.Read: Why Google Wants to Release Millions of Mosquitoes in the USClick here to get the latest news updates from Tempo on Google News
