Indonesia’s Tax Sovereignty Toward Digital Multinational Companies

DOI

10.2991/978-2-38476-279-8_18How to use a DOI?

Keywords

Sovereignty; International; Tax; Digital

Abstract

In the 21st century, international trade dynamics have shifted due to the rise of digital and internet-based communication networks. Companies now leverage technology to expand their global sales without significant investments in time, labor, and capital. While this benefits companies by reducing costs, it creates legal and economic disparities. Multinational companies gain an advantage, while countries suffer as their markets are exploited without permission and digital trade often bypasses traditional licensing. The global pandemic, Covid-19, further complicated this scenario, causing many conventional businesses to shut down. In response, multinational companies increasingly turned to digital platforms, leading to a surge in digital enterprises. This shift resulted in substantial tax revenue losses for countries, prompting several to implement digital tax regulations. However, these regulations vary widely, leading to inconsistencies, potential tax evasion, and the risk of double taxation. Indonesia faces significant challenges in this context. Despite its large market potential for digital tax collection, the country approaches digital taxation cautiously. Currently, Indonesia only imposes value-added tax (VAT) on digital transactions, similar to conventional transactions, as it is an indirect tax borne by consumers. This cautious approach aims to avoid international sanctions due to the lack of global consensus on taxing digital multinational companies. This research explores Indonesia’s sovereignty in shaping policies for its national interests and the opportunities and challenges in implementing digital taxes on multinational companies. The study uses normative juridical methods and incorporates statute, case study, and conceptual approaches.

Copyright

© 2024 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Ujang Badru Jaman
AU  - Endah Pertiwi
AU  - Nucharaha Alhuda Hasnda
PY  - 2024
DA  - 2024/08/30
TI  - Indonesia’s Tax Sovereignty Toward Digital Multinational Companies
BT  - Proceedings of the International Conference on Law, Public Policy, and Human Rights (ICLaPH 2023)
PB  - Atlantis Press
SP  - 147
EP  - 161
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-279-8_18
DO  - 10.2991/978-2-38476-279-8_18
ID  - Jaman2024
ER  -