The Center of Economic and Law Studies (Celios) has highlighted a significant imbalance: tax revenue from global Over-The-Top (OTT) platforms operating in Indonesia is disproportionately low compared to their colossal earnings, which reach trillions of rupiah. “When advertisements are broadcast in Indonesia, the taxes ironically flow to Singapore because the headquarters of companies like Google and Meta are located there, not in Indonesia,” stated Nailul Huda, Celios’ Digital Economy Director, during a study dissemination session in Jakarta on Tuesday, June 2, 2026.
Huda’s remarks were part of his presentation on Celios’ comprehensive study concerning the governance of the OTT industry in Indonesia. The study revealed that the Gross Merchandise Value (GMV) generated by global OTT platforms within Indonesia reached a staggering Rp 1,350 trillion in 2024. Despite this immense economic activity, the digital sector’s tax contribution to the nation’s digital economy remains a paltry 0.27 percent.
According to Huda, this minimal tax collection is largely attributable to Indonesia’s primary reliance on Value Added Tax (VAT) for trade conducted through electronic systems (PPN PMSE). This approach means that the tax burden from the OTT industry is predominantly borne by Indonesian consumers, rather than being collected directly from the platforms themselves.
Beyond the consumer-centric tax model, Huda further explained that another critical factor contributing to the low tax revenue from OTT services is the absence of Permanent Establishments (BUT) or physical offices for global OTT platforms in Indonesia. “When we tell Google, ‘come pay your taxes,’ they argue that since they don’t have an office here, why should they pay taxes?” Huda elaborated, pointing to a loophole exploited by these multinational entities.
However, Huda emphasized that Indonesia possesses a robust legal framework designed to address this issue. Law Number 2 of 2020 concerning Job Creation (the Cipta Kerja Law) mandates that platforms register as Permanent Establishments in Indonesia. This crucial legislation provides the foundation for taxing foreign taxpayers based on their significant economic presence (SEP) within Indonesia, even if they lack a physical office but demonstrate substantial economic dependence on the country’s market.
To effectively measure the economic impact of OTT platforms and ensure fair taxation, Huda suggested that the government must implement clear thresholds based on metrics such as user numbers, transaction volumes, or advertising revenue. He cited recommendations from the Organisation for Economic Cooperation and Development (OECD), which proposes a minimum tax of 15 percent for global OTTs that generate at least Rp 13 trillion in annual revenue, Rp 10 trillion in net profit, and a minimum of Rp 500 billion in revenue specifically from Indonesia. This framework would ensure that global OTT platforms with significant market share in Indonesia contribute their equitable share of taxes.
Celios, Huda revealed, has developed three distinct policy scenarios for enhancing digital taxation in Indonesia. These include a 1 percent Withholding Tax (WHT), a 3 percent WHT, and a 0.75 percent levy for Universal Service Obligation (USO). Several countries, including South Korea, Turkey, and those within the European Union, have already implemented similar levy schemes. These pioneering approaches have proven effective in maximizing state revenue and fostering the development of their respective digital industries.
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Summary
The Center of Economic and Law Studies (Celios) has identified a significant tax imbalance, noting that global OTT platforms like Google and Meta contribute only 0.27 percent in tax revenue despite generating trillions in Indonesian market value. This issue stems from platforms bypassing local taxation by maintaining headquarters in Singapore and operating without physical establishments in Indonesia, often shifting the tax burden onto local consumers through VAT instead of direct corporate contributions.
To address this, Celios points to the Job Creation Law, which mandates that platforms with significant economic presence must register as permanent establishments. Experts recommend adopting OECD frameworks, such as a 15 percent minimum global tax, alongside local policy proposals like withholding taxes and universal service levies. These measures aim to ensure that multinational tech firms pay an equitable share of taxes commensurate with their massive economic activity within the country.