Digital Economy Taxation and Global Equity: Indonesia’s Approach in Comparative Perspective

Abstract

The digitalization of the global economy has intensified debates over taxing rights, equity, and revenue allocation, particularly affecting developing market jurisdictions. This paper analyzes Indonesia’s digital economy taxation policies within the broader context of global tax justice. Employing normative legal analysis and comparative assessment, the study evaluates Indonesia’s unilateral digital taxation measures alongside its engagement with the OECD/G20 Two-Pillar Solution. The findings reveal that while interim digital taxes strengthen short-term revenue collection, global consensus mechanisms continue to privilege residence-based taxation and limit market countries’ fiscal sovereignty. Indonesia’s experience demonstrates the structural challenges faced by developing economies in asserting fair taxing rights over digital value creation. This paper contributes to the global literature by critically assessing the justice implications of digital tax reforms from a Global South perspective, arguing for a reallocation of taxing rights that better reflects economic substance and user participation. By situating Indonesia’s approach within international debates, the study offers policy-relevant insights for developing countries seeking equitable solutions in the digital age and contributes to rethinking global digital tax governance beyond efficiency-driven frameworks.