Maintaining Fiscal Fairness in 'Micro Drama' Digital Services
The digital economy phenomenon often develops faster than regulation can keep pace. One of the latest examples is the proliferation of Chinese micro drama streaming services, which have now reached millions of Indonesian internet users.
Short-format programmes with fast-paced storylines and a pay-per-episode business model have captured public attention, particularly among younger generations seeking instant entertainment amid their busy daily lives.
However, behind this rapid popularity lies an issue that has received little discussion. Some micro drama services do not operate through official digital platforms appointed as collectors of Value Added Tax (VAT) on Electronic Commerce Transactions (PMSE), but are instead distributed through links that change continuously.
Payments are made via QRIS and various digital wallets, directing funds to accounts whose business identities and beneficial owners are difficult to verify.
On the other hand, the Government has built an increasingly robust digital economy tax regime. As of March 2026, the Directorate General of Taxes (DJP) has appointed 262 PMSE businesses as VAT collectors, 231 of which have remitted PMSE VAT.
Under this policy, PMSE VAT revenue has reached Rp38.76 trillion, or nearly 77 per cent of total digital economy tax revenue of Rp50.51 trillion, which also includes taxes on crypto-assets, fintech, and the Government Procurement Information System (SIPP).
This achievement shows that the PMSE VAT mechanism works effectively when transactions take place through platforms with clear legal identity and administration.
Conversely, distribution models based on nomadic links fall outside this administrative chain, allowing economically valuable transactions to take place without leaving adequate tax traces.
Amid the rapid growth of Indonesia’s digital economy, which is estimated to remain the largest in Southeast Asia, this situation has the potential to create a new tax gap — the disparity between the tax potential that could theoretically be collected and actual state revenue.
If this grey area is left unaddressed, the problem is not merely the loss of potential VAT, but also the creation of horizontal inequity, because compliant digital businesses that collect and remit VAT must compete with informal service providers operating beyond the state’s oversight system.
In recent years, the government has in fact demonstrated considerable success in taxing global digital companies. Various streaming platforms, marketplaces, and cross-border digital service providers have been appointed as PMSE VAT collectors.
However, that success was built on the assumption that businesses can be clearly identified. When business models shift towards more informal and anonymous arrangements, new challenges emerge that require a different approach.
Digital inequality