Monday, 14 October 2019 | 10:12 WIB

Indonesia Finance Minister Eye Taxing Digital Economy Activities

Indonesia Finance Minister Eye Taxing Digital Economy Activities (akurat)

JAKARTA, NETRALNEWS.COM - Indonesia Finance Minister Sri Mulyani has sought an approach to collect taxes from digital economic activities that had not been optimally implemented so far to increase state revenues.

"For companies that are considered digital, tax friends have a basis in calculating with estimates based on their data and later agreed upon," Sri Mulyani said.

She stressed that this effort must be carried out because every economic activity in Indonesia must be taxed in accordance with applicable laws and regulations.

Sri Mulyani ensures the imposition of income tax rates from each digital economic transaction will remain the same as conventional buying and selling activities.

However, she said the difference is the procedure for levies because the Permanent Business Entities (BUT) involved in digital economic activities do not all have representatives in Indonesia.

One approach to levies sought is taxation obligations based on how many economic transactions or volumes of activities obtained in one country.

"Because they are digital companies, so we see how much they generate revenue in one country called the economic present rather than the physical present," the Minister said, as reported by Antara.

This approach will be carried out while there is a joint consensus from the G20 countries to collect taxes from digital economic activities.
This unilateral effort has been carried out by the British and French governments in collecting taxes from electronic transactions.

"These two countries have carried out unilaterally, even though there has been no agreed approach. So Britain and France have agreed on their own tax base based on economic present," she explained.

According to Sri Mulyani, this levy approach can be done fairly based on information from sales, advertisements and other data and can be integrated if a global agreement has been created.

"If in 2020 these principles can be agreed upon by the G20 or more than 100 jurisdictions, then there is a conversion of the unilateral approach into a global agreement," Sri Mulyani said.

Previously, Sri Mulyani had also issued Minister of Finance Regulation Number 35/PMK.03/2019 concerning the establishment of BUT in early April 2019.

In this regulation, Foreign Persons or Foreign Bodies that run a business or conduct activities through BUT must register themselves to obtain a Tax Registration Number.

BUT is a form of business that is used by a Foreign Person or Foreign Agency to run a business or conduct activities in Indonesia.

Particularly related to the implementation of the digital economy, the place of business referred to in Article 5 paragraph 1 is computers, electronic agents, or automatic equipment owned, rented, or used by foreigners or foreign entities to conduct business through the internet.

Various efforts have been made towards acts of fraud including the handling of tax treatment for digital economic activities.

Today, digital economics has changed the business model that eliminates the physicality of a company making it difficult to calculate tax obligations.

To that end, in an effort to anticipate changes in the pattern of buying and selling that are based on electronics, a new tax system that is inclusive and fair is needed.