Law and Humanities
Quarterly Reviews
ISSN 2827-9735
Published: 08 June 2025
Collection of Value Added Tax on Online Transportation Services in Indonesia: A Literature Review
Clint Gunawijaya, Budi Ispriyarso
Universitas Diponegoro, Indonesia
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10.31014/aior.1996.04.02.149
Pages: 46-53
Keywords: Digital Economy, Indonesia, Online Transportation, Value-Added Tax
Abstract
The enormous growth of the digital economy has given tax authorities everywhere, including Indonesia, both opportunities and difficulties. An important aspect of the transportation environment is now online platforms that use digital applications to link drivers and passengers. The Value Added Tax (VAT) collection on Indonesian online transportation services is thus the subject of this literature review. This paper summarizes the body of knowledge regarding the implementation and difficulties of collecting VAT on these services in Indonesia, including academic literature, legal frameworks, and policy discussions. The review also looks at the potential ambiguities in the implementation of VAT, the legal basis for its imposition, and comparisons with the VAT treatment in other traditional transportation and digital services sectors. In order to give a thorough grasp of Indonesia's online transportation VAT collection, this review will synthesize existing knowledge, identify research and policy gaps, and recommend possible areas for further study and regulatory improvement. In the end, this work advances knowledge of the financial effects of the digital economy in Indonesia, particularly with regard to the changing online transportation scene.
1. Introduction
Land transportation is a business sector that is currently growing. The increase in the number of motorized vehicles in Indonesia evidences this. According to the Central Statistics Agency (BPS), the number of motorized vehicles in Indonesia reached 136.32 million units in 2020. This includes 115.29 million motorcycles, 15.8 million passenger cars, 5.01 million trucks, and 233,420 buses (Katadata, 2021). This total has increased by 14.39 million motorized vehicles compared to 2015 (Katadata, 2017). In addition to the growth in the number of vehicles, the choices for land transportation services are also increasingly diverse, ranging from buses, city transportation, microlets, travel services, and taxis to motorcycle taxis (ojek).
Over time, the development of the internet has driven a transformation related to how humans interact with each other, carry out daily activities, including in the field of land transportation services. In 2019, the number of internet users worldwide was 3.97 billion people. This means that more than half of the world's population is now connected to the internet (Johnson, 2021).
The way that business is conducted in Indonesia has evolved as a result of technological advancements and the use of online transportation systems, for instance, Grab, Gojek, and Uber. In addition to being a result of the advancement of information technology, online transportation emerged as a result of consumer desire for a rapid, simple, and useful service. Furthermore, online transportation methods offer lower cost, convenience, flexibility and guaranteed security (Endang, 2017; Tuasalamony, 2020). People can choose from a greater range of services with different quality and quantity according to their preferences. On the one hand, the internet's impact on customers as a result of the information technology revolution has altered their behaviour, making them more picky and critical about the things they choose. The range of transportation service modes is now more accessible to consumers. For instance, a group of four individuals would find it easier to use an online taxi to order transportation to move from one place to another.
The result of this rapid technological development is the emergence of various new types of transactions facilitated by technology. One form of new transaction that has emerged is the online transaction of goods and services. Specifically for online service transactions, a common example in people's daily lives is ordering online transportation services using applications.
Online transportation or ride-hailing services are a new travel option that allows passengers to request a car or motorcycle ride on demand from driver-partners using a smartphone application (such as Gojek, Grab, and Maxim) (Rayle et al., 2016). With this technology, the waiting time for potential passengers can be reduced compared to using conventional taxis or ojek (Feng et al., 2017). The initiative to create online transportation applications in Indonesia began with Gojek in 2011. Then, in 2014, Grab and Uber began entering the Indonesian market and increased the popularity of online transportation applications since 2015 (Prabowo, 2018).
As of June 2020, 170 million users had downloaded the Gojek application, and the Grab application had been downloaded by 187 million users (Eka, 2020). Of these downloads, 90% came from Indonesia for Gojek and 66% from Grab. The large number of users of both applications shows that the public accepts these applications because they offer a convenience that has never existed before.
Nevertheless, behind all the convenience offered, the taxation issues arising from the operation of online transportation services need to be examined. Basically, all transactions in the service sector are taxable services (Jasa Kena Pajak - JKP), except for those not included as JKP based on the VAT Law. To date, land transportation services for public interest are one type of service that is exempt from VAT based on the Minister of Finance Regulation Number 80/PMK.03/2012 concerning Public Land Transportation Services and Public Water Transportation Services Not Subject to VAT. The determination of whether a land transportation service is in public interest is made by checking the motor vehicle registration plate (TNKB). Only vehicles with yellow TNKB and black writing receive VAT exemption facilities. Thus, business actors in the field of land transportation services for public interest are not allowed to collect VAT. This aims to protect the purchasing power of land transportation service consumers and drive the economy.
The emergence of the online transportation service application business model blurs who is obligated to pay taxes. This is because the role of the application company is only as a liaison between customers and driver-partners. This business model obscures the boundary between being a technology company and a transportation service company. If treated the same as taxi companies, application-owning companies do not meet the requirements of transportation service companies that have existed so far. However, application-owning companies actually provide services through their operations in Indonesia. Therefore, the Government, through the Directorate General of Taxes, also feels entitled to obtain tax revenue from these online transportation service application companies (Sukmawijaya, 2017).
Until now, there is no legal umbrella that forms the basis for VAT collection on online transportation services, but there has been a plan to implement collection since 2017. This plan emerged after the Ministry of Transportation issued Minister of Transportation Regulation Number 32 of 2016 concerning the Implementation of Public Passenger Transportation with Public Motor Vehicles Not in Routes. After the issuance of this regulation, the Ministry of Transportation and the Ministry of Finance held a meeting to discuss issues related to online transportation services (Sukmawijaya, 2017). The result of this meeting was the statement by the Minister of Finance, Sri Mulyani: "The signal is that the government will create a level playing field. So, if between online and conventional businesses, the treatment regarding taxation is also the same."
Based on this statement, there is already a plan to provide the same treatment for businesses conducted online and conventionally, especially regarding taxation, including VAT. For comparison, the government has currently issued the Regulation of the Minister of Finance of the Republic of Indonesia Number 48/PMK.03/2020 as the legal basis for collecting VAT on trade through electronic systems. The primary targets of this regulation are application companies that sell products via marketplaces and streaming services for music and video. This regulation states that there is currently no regulation governing the use of VAT collection for online transportation services.
This study has three primary goals. A thorough grasp of Indonesia's online transportation VAT collection is the primary goal of this study. The second is determining any gaps in VAT policy that currently exist in the context of online transportation. Last but not least, this paper provides a conceptual framework to help future investigations and regulatory refinement.
2. Research Method
2.1 Literature Synthesis Analysis
Problem identification, research objectives, and research question formulation are the first steps of the study. In order to guarantee that everyone understands the terminology used in this study, concepts must be defined. A literature review will next be conducted in order to develop the research. A literature review's main goal is to provide a thorough overview of value-added tax research and online transportation. The literature review also helps to clarify the rational relationship between earlier and current research. Journal articles, research papers, and books make up the study's literature. The reviewed literature will be analyzed to extract research findings. The research findings will ultimately be used to conclude. There are also suggestions for additional research.
3. Results and Discussions
In the literature review, the qualitative analysis of the resulting papers has been arranged into three columns: author and year of publication, article objective, and findings. The research on the application of VAT in Indonesia is described in Table 1. In the context of online transactions, this aids in exposing Indonesian VAT policy gaps.
Table 1: Results of Literature Review
Author | Objectives | Findings |
Zebua & Setiawan (2024) | Examines policies on online transportation and conventional public transport. | · More lenient and accommodating rules regarding online travel as opposed to traditional modes of transportation |
Aulia et al (2025) | Investigate how Indonesia's governmental revenue and social welfare are affected by the 12% VAT hike. | · The VAT increase mostly affects secondary and tertiary goods, while basic commodities remain unaffected, causing the Consumer Price Index (CPI) to increase by 0.8 to 1 percent. · It is crucial that the government establish efficient monitoring systems and provide targeted subsidies and direct aid. |
Wahyudi & Wijaya (2021) | Ascertain how an application company handles value-added tax and the relevant tax laws. | · Drivers and partners who use the application services offered by online motorcycle taxi companies are subject to value-added tax. · Since there is already a contract between the two parties, online motorcycle taxi operators' transaction submission of applications does not meet the requirements for being a retail entrepreneur. · Regardless of whether the application user has an NPWP or not, online motorcycle taxi providers should create a tax invoice for each of these submissions in accordance with taxation regulations. |
Tausalamony et al (2020) | Ascertain how well online transportation company taxpayers comply with their tax-related duties at the West Makassar Primary Tax Office (KPP). | · The Primary Tax Office (KPP) of West Makassar works to reduce the challenges that arise by educating people about taxes, either directly or through social media or online, as not all online transportation partners or drivers are aware of the tax reporting requirements. · There are no particular rules governing the classification of internet transportation businesses, and it is challenging to determine whether taxpayers operating these businesses are in accordance with tax laws. |
Siregar & Harahap (2020) | To examine how Value Added Tax is handled in online sales. | · Tax losses resulting from the current VAT imposition on e-commerce transactions cannot be appropriately used, and not all businesses impose VAT on the consumer. · When online firms use VAT in their operations, the DGT should legally establish rights and obligations. If they don't charge VAT to the buyer, the DGT should impose strict penalties on them. |
Fang & Ma (2024) | Evaluates the impact of EU VAT reform on cross-border e-commerce | · Although online tax compliance has increased as a result of the EU reform, it has negatively affected consumers to a great extent. |
Asante et al (2024) | Examining the nature and results of the E-levy tax bargaining process, public views the engagement process, encapsulating the character of citizen-state relations as expressed in public opinions regarding government responsiveness throughout the E-levy dispute. | · People are actively using a number of tactics to evade paying taxes, such as switching back to cash and lowering the amount and frequency of transactions, in light of the poor tax morale. The administration made the situation worse by "loosening the safety net" and "tightening the tax net" during a period when the nation was experiencing an economic crisis and was still dealing with the effects of the COVID-19 pandemic. |
Santoso & Julia (2021) | Analyse the use of an electronic system for VAT collection on trade in an attempt to boost tax revenue at the Bekasi Utara Primary Tax Office, based on an examination of the implementation, the challenges encountered, and the measures taken to overcome these challenges | · KPP Pratama Bekasi Utara's implementation of VAT on Trading Through Electronic Systems in an Effort to Increase Tax Revenue has not been carried out as effectively as it could be, since not all PMSE business players are aware of and follow the rules pertaining to VAT collection on PMSE transactions. |
Fathur et al (2020) | Examine how the Value Added Tax (VAT) policy and e-commerce affect consumer behavior. | · The presence of e-commerce and VAT policies had a positive and significant impact on consumer behavior because, according to students in the Faculty of Economics and Business, e-commerce made it easier to purchase the goods they wanted, and students were more likely to trust e-commerce sites if they were given clear information about the imposition of VAT and believed that the policy did not negatively impact their desire to purchase the product. |
Moossdorff (2024) | Examine how digital platforms are used to collect VAT on services in a few of the most important Middle Eastern nations. | · Operators of digital platforms and service providers should evaluate their stance, decide who is responsible for accounting for VAT, and adjust the arrangements as needed to support or modify their stance. · Digital platforms operating in the Middle East must constantly monitor and assess changes in domestic legislation pertaining to platform responsibility, given the continuing examination of VAT regulations worldwide. |
Elisabeth (2023) | Determine whether Ministry of Finance Regulation No. 60/PMK.03/2022 satisfies international standards by using the Regulatory Impact Assessment included in the Organization for Economic Co-operation and Development's recommendations. | · Through tariff adjustments and the implementation of multi-tariff VAT, PMK 48/2020 and PMK 60/2022 were passed in an effort to help lower the state budget deficit. |
Rivaldi (2021) | Determine and summarize the issues of taxes on the digital economy, the types of digital service items, and their pressing importance for Indonesia. | · Big-Tech businesses' home base will differ due to the appropriate authorities' lack of alignment. · The current international tax system is no longer regarded as being applicable. · Expanding the international tax regime to levy taxes on foreign digital enterprises that do not have a physical presence but have a major economic presence in destination countries should be made possible by the growth of digital commerce. |
Sari (2022) | Analyze the potential increase in VAT revenue of 2023 and the strategies implemented by the government in respond to the vast digital economy shifting. | · The digital tax, which was introduced in mid-July 2020, has gradually increased until 2022, despite the PMSE VAT performance being negligible in comparison to other VAT deposits. · Many significant overseas corporations have been appointed PMSE VAT collectors as a result of the expansion of tax items that have not yet been touched. |
Sumilat et al. (2025) | Explore the process of imposing VAT on digital goods transactions. | · With a VAT rate of 11%, the VAT PMSE mechanism, which is used to impose VAT on digital transactions, is applied to all digital transactions. Since digital commodities are intangible and subject to a single tariff system, there is no particular classification for transactions involving them. · The VAT collectors are obligated to remit the VAT on transactions involving digital goods by the end of the subsequent month, together with the accompanying paperwork. · Since the majority of businesses are foreign, the VAT reporting for transactions involving digital goods is completed on a quarterly basis. This strategy guarantees that these businesses conveniently and methodically report VAT each quarter. |
Lembang (2021) | Study the regulations governing the imposition of VAT on digital products that are smartphone applications, as well as the efficacy of applying VAT rates to users of smartphone applications in relation to the progressive legal paradigm and the theory put forth by Lawrence M. Friedman and Roscoe Pound. | · VAT on smartphone applications can be used to boost state revenue and establish equity for all business actors—conventional and digital—it is deemed effective. |
The suggested framework is displayed below to illustrate the anticipated relationship between the variables. Figure 1 depicts a flow starting with Online Transportation Service Transaction and Taxable Service leading to Value-Added Tax, which is then linked to Law No. 8 Year 1983 in conjunction with Law No. 7 Year 2021 and subsequently influences VAT Collection on Taxable Service via Article 4, Article 4A paragraph (2) and (3), Article 7.
Figure 1: Conceptual Framework
Three main gaps are identified. First, the flowchart begins with "Online Transportation Service Transaction" as a specific case. Sari (2022) and Zebua & Setiawan (2024) highlighted differences in regulations between online and conventional transport. To ensure the same playing field between offline and online transaction landscapes, it is worth exploring the VAT treatment and other tax policies that contribute to or mitigate competitive imbalances between online and traditional service providers.
In addition, to analyze about VAT law, Law No.8 Year 1983, in accordance with Law No. 7 Year 2021 is used. It's intriguing to look into how effectively this legal framework handles VAT on digital services, such as online transportation, which is a subset of taxable services. Furthermore, studies can confirm whether Indonesia's VAT regulations adhere to global standards. To determine whether it adopts or departs from global best practices for taxing the digital economy, future research can present additional analysis that goes beyond the domestic legal framework.
Third, we need to research the government's strategy in relation to "VAT Collection on Taxable Service". This is to guarantee efficient VAT collection, especially when it comes to online services. The Indonesian government has already established a VAT regulation for electronic service providers (PMSEs), but the regulation does not yet specify a specific classification for transactions involving them, according to Sari (2022) and Sumilat et al. (2025). For example, even though the law establishes the framework for VAT collection, it is still unclear how the government will oversee and implement this for digital services like online transportation.
4. Conclusions
This article concludes by providing a thorough understanding of Value Added Tax (VAT) collection in Indonesia's quickly expanding online transportation industry. It demonstrates how important this industry is to the larger digital economy and focuses on the unique business model of online motorcycle taxis, where providing application services to driver partners becomes a crucial factor for VAT calculations. Through a review of the literature, the study finds preliminary information about how VAT is applied in online transactions and the unique context of online transportation, highlighting areas where existing policies might be lacking or need clarification.
In addition, the paper effectively identifies the current VAT policy's shortcomings with regard to online travel. The literature review identifies issues with applying current VAT laws intended for traditional services to digital platforms, the disparities in how online and conventional transportation are treated by the government, and the practical challenges of guaranteeing efficient VAT collection from digital service providers. A more detailed and specialized regulatory framework that is adapted to the particularities of the online transportation sector is required, as these gaps have highlighted.
Lastly, this paper offers a conceptual framework that serves as a foundation for understanding the relationship between taxable services, VAT, online transportation service transactions, and the pertinent legal basis. Future research into the nuances of VAT collection in this field can be guided by this framework, which is a useful tool. The article's concise description of the main factors and their possible relationships opens the door for more in-depth investigation and possible regulatory improvement to maximize VAT collection and guarantee fair competition in Indonesia's changing transportation environment.
Author Contributions: All authors contributed to this research.
Funding: Not applicable.
Conflict of Interest: The authors declare no conflict of interest.
Informed Consent Statement/Ethics Approval: Not applicable.
Declaration of Generative AI and AI-assisted Technologies: This study has not used any generative AI tools or technologies in the preparation of this manuscript.
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