Parliament moves to impose tax on online transport platforms through new traffic bill
Indonesia's House of Representatives is advancing legislation to tax digital ride-hailing companies and regulate the country's growing online transportation sector, addressing a legal vacuum that has existed since Law No. 22 of 2009 was enacted before such services existed.
Traffic bill to regulate tax on online transport firms: DPR
Indonesia's House of Representatives is pushing forward with legislation that would impose taxes on application-based transportation companies and establish a comprehensive regulatory framework for the country's burgeoning digital ride-hailing sector, which currently employs nearly three million online motorcycle taxi drivers.
Deputy Chairman of Commission V Syaiful Huda announced during a joint meeting with government officials on Wednesday that the Traffic and Road Transportation Bill would introduce tax provisions targeting platforms operating in the ride-hailing market, which was valued at USD 3,770 million in 2025 and is projected to reach USD 5,670 million by 2031.
This bill must be able to cover Non-Tax State Revenue from application-based companies, with the tax system regulated so that potential state revenue is not lost
Huda stated at the parliamentary complex. The proposed legislation comes as Indonesia's non-tax state revenue reached Rp435.1 trillion in January-August 2026, representing a 41.7 percent year-on-year increase and achieving 94.8 percent of the annual target.
Addressing a Legal Vacuum
The legislative initiative responds to a critical gap in Indonesia's legal framework. The current Traffic and Road Transportation Law No. 22 of 2009 was enacted before online transportation services combining technology with passenger transport existed in the country, creating regulatory uncertainty as platforms like Gojek and Grab came to dominate the market with approximately 47 percent and 44 percent market shares respectively.
The bill addresses several key areas beyond taxation, including the regulation of road maintenance funds and the legal status of both two-wheeled and four-wheeled online transportation vehicles, as well as provisions for special rental vehicles and transport services.
Road Preservation Funding Reform
Huda explained that while the existing law includes provisions for road preservation funds, implementation has been suboptimal. Indonesia's road maintenance has historically suffered from insufficient and unsustainable budget allocations, with funding managed through government budget allocations that lack sustainability guarantees. Currently, the Ministry of Public Works manages national road preservation through the National Road Preservation program, while subnational maintenance relies on the Special Allocation Fund and local budgets.
The regulation on road preservation funds needs to be resynchronized with the principles of state financial management
Huda emphasized. The need for improved infrastructure funding is underscored by Ministry of Transportation data showing that traffic congestion causes national economic losses estimated at Rp77 trillion annually, approximately US$4.2 billion.
Platform Regulation and Driver Protection
The bill proposes to regulate corporate tax on fares for passenger transport using non-route public motor vehicles based on digital applications, a provision that DPR members argue should be established by law. This regulatory push follows Presidential Regulation No. 27/2026, issued on May 1, 2026, which capped digital platform commissions at 8 percent—the lowest rate in the region compared to Malaysia, Thailand, and Vietnam, where rates range from 20-25 percent.
The legislation carries significant social and economic implications. According to a survey by Litbang Kompas conducted in early 2026, 48.8 percent of online ride-hailing drivers earn an average gross income between Rp75,000 and Rp100,000 per day, highlighting the precarious economic position of many workers in the sector.
Social problems will escalate sharply in the social and economic sectors, and could even affect political conditions
Huda warned, explaining the urgency of establishing clear legal status for online transportation operations.
Government Support and Enforcement
Transportation Minister Dudy Purwagandhi expressed the government's approval of the parliamentary proposal during the meeting. The regulation would cover operational mechanisms, rights, and obligations of application-based companies, with provisions for sanctions against platforms that fail to join insurance programs, violate fare provisions, or fail to meet motor vehicle quota requirements.
The proposed enforcement mechanisms aim to ensure compliance across the industry while protecting both drivers and passengers in Indonesia's rapidly expanding digital transportation ecosystem.