The study, published in 2026 in the Indonesian Journal of Accounting and Financial Technology (CRYPTO), was written by Aina Muawanah, Shifa Aulia Intan Soraya, Zaki Pahlevi, Mega Metalia, and Ratna Septiyanti. The researchers examined Indonesia’s VAT implementation in the digital economy and found that weak taxpayer compliance, limited digital supervision, and cross-border transaction complexity continue to reduce the effectiveness of tax collection in the e-commerce sector.
The findings are significant as Indonesia has become the largest digital economy in Southeast Asia. Online marketplaces, streaming services, app stores, and social commerce platforms are now central to the country’s economic activity. As millions of consumers shift toward online transactions, the government faces increasing pressure to ensure that digital economic growth translates into sustainable state revenue.
According to the study, Indonesia’s e-commerce transaction value surged from around Rp77 trillion in 2018 to more than Rp533 trillion in 2023. The sector recorded an average annual growth rate of more than 47 percent over five years, far exceeding overall national economic growth.
The researchers noted that the COVID-19 pandemic accelerated long-term changes in consumer behavior. Shopping through digital platforms became a permanent part of daily life for many Indonesians, pushing businesses of all sizes from large corporations to micro enterprises into online marketplaces.
This transformation has expanded the country’s taxable digital economy dramatically.
“If all e-commerce transactions were fully subject to VAT collection, the potential revenue could reach tens of trillions of rupiah annually,” the researchers from the University of Lampung explained in their analysis.
Indonesia has already introduced several regulations to address digital taxation. The government issued Ministry of Finance Regulation No. 48/PMK.03/2020 to regulate VAT collection on electronic commerce transactions. The policy was later strengthened by the 2021 Tax Harmonization Law, which updated VAT rates and reinforced the legal basis for digital tax collection.
Under the current system, foreign digital platforms operating in Indonesia, including streaming services and app marketplaces, are required to collect and remit VAT on transactions involving Indonesian consumers.
The study found that more than 167 foreign digital platforms had officially been appointed as VAT collectors by the Directorate General of Taxes (DGT) by the end of 2023. This represents a major step forward for Indonesia’s digital tax administration.
However, the researchers argue that significant gaps remain.
One of the most critical problems is low tax compliance among digital micro, small, and medium enterprises (MSMEs). Many small online sellers still lack sufficient understanding of VAT obligations. Others consider tax administration procedures too complex and burdensome compared to the perceived benefits of compliance.
The research identified several major barriers affecting VAT implementation in Indonesia’s e-commerce ecosystem:
- limited digital monitoring capacity within the tax authority;
- low tax literacy among online MSMEs;
- difficulties tracking cross-border transactions;
- incomplete real-time transaction monitoring systems;
- limited international data-sharing mechanisms.
The researchers also highlighted the challenge of identifying foreign digital platforms that should be registered as VAT collectors. Although Indonesia has implemented legal thresholds for platform registration, enforcement and monitoring remain difficult because of limited access to internal transaction data from international platforms.
Domestic e-commerce transactions also remain difficult to supervise, especially among sellers operating informally through marketplaces and social media platforms.
The study used a qualitative descriptive approach based on a systematic literature review. The research analyzed Indonesian tax regulations, Directorate General of Taxes reports, OECD policy documents, Ministry of Finance regulations, and indexed academic journals published between 2018 and 2024.
Rather than relying on surveys or experiments, the researchers synthesized existing policy reports, legal frameworks, and international case studies to identify recurring patterns and structural weaknesses in Indonesia’s digital VAT system.
The paper also compared Indonesia’s approach with international models implemented in the European Union, Australia, Singapore, and India.
The European Union’s One Stop Shop (OSS) system was identified as one of the most efficient models because it allows companies to report VAT obligations across multiple countries through a single digital portal. Australia’s marketplace collection model was also highlighted for requiring digital platforms to collect taxes directly from transactions occurring within their systems.
Singapore, meanwhile, applies a risk-based Overseas Vendor Registration system focusing on high-volume digital service providers.
According to the researchers, Indonesia has already aligned many of its regulations with international standards recommended by the OECD. However, implementation effectiveness still depends heavily on technological modernization and institutional coordination.
The study specifically emphasized the strategic importance of Indonesia’s Coretax system, the new integrated tax administration platform currently being developed by the Directorate General of Taxes.
The researchers believe Coretax could significantly improve VAT compliance and digital transaction monitoring by integrating marketplace transaction data into a centralized system capable of real-time analysis.
“Indonesia requires scalable, technology-based solutions to supervise a rapidly growing digital taxpayer population,” the researchers wrote.
The study also stressed that enforcement alone will not solve compliance problems. Long-term improvement in tax compliance requires simpler procedures, stronger taxpayer education, and greater trust between tax authorities and digital business operators.
To improve the VAT system for e-commerce transactions, the researchers proposed several policy recommendations:
- accelerate AI-based and big-data-driven tax administration systems;
- simplify VAT reporting procedures for digital MSMEs;
- strengthen international cooperation on digital taxation;
- encourage partnerships between marketplaces and tax authorities;
- expand taxpayer education programs for online businesses.
The research concludes that Indonesia’s digital tax future will depend not only on stronger regulations but also on the country’s ability to adapt its administrative systems to the realities of a borderless digital economy.
Author Profiles
Aina Muawanah is a researcher affiliated with the DIII Taxation Program at University of Lampung, focusing on digital taxation and fiscal policy. She co-authored the study with Shifa Aulia Intan Soraya, Zaki Pahlevi, Mega Metalia, and Ratna Septiyanti. The research team specializes in taxation, digital economy policy, and public financial administration.
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