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Indonesia to explore options for taxing tech giants
The reaching of a consensus could deal a major blow to multinational companies, such as Facebook and Google, among others, that avoid taxes by registering their profits in countries with low tax rates while also challenging countries that use low tax rates to attract foreign investment.
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Google (AFP/Lionel Bonaventure )
T
he government is exploring options on how to tax tech giants after the Group of 20 ( G20 ) affirmed its commitment in its communique to agreeing to a set of rules on digital taxation by next year.
The Finance Ministry’s Taxation Directorate General international taxation director, John Hutagaol, said the government was preparing regulations on the issue.
The government is also awaiting a consensus that is set to be reached by 2020 hopefully after a report issued by the Inclusive Framework on Base Erosion Profit Shifting (BEPS).
The Inclusive Framework on BEPS is a working group under the Organization for Economic Cooperation and Development (OECD) that brings together over 125 countries and jurisdictions to fight against global tax avoidance.
“[We] are preparing regulations with a view to expanding the definition of permanent establishment and antitax-avoidance rules — such as the Special Anti-Avoidance Rule [SAAR] and General Anti-Avoidance Rule [GAAR] in responding to the latest developments in the digital economy,” said John.
He added the Inclusive Framework allowed its members to pursue their own initiatives before a global consensus was reached. The measures, however, should be revoked by members if they contradicted the measures agreed by the Inclusive Framework.
He further said the Inclusive Framework suggested that its members collect indirect tax such as value added tax (VAT), general services tax (GST) or sales taxes according to the members’ domestic regulations.
