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Jakarta Post

Finding right way in taxing digital economy

  • Chintya Pramasanti and Yanuar Falak Abiyunus

Jakarta   /   Mon, September 23 2019   /  12:37 am

The digital economy has rapidly grown in Indonesia during the past several years, but its contribution to the country is still quite insignificant.With the advancement of digital technology, foreign companies are able to reach foreign markets without a physical presence. On the other hand, with the existing Tax Law, the government is unable to tax them.With the fourth largest population in the world, Indonesia is a big market for digital goods and services. According to Temasek’s estimate in 2018, the e-commerce market in Indonesia stood at US$12.2 billion and the digital media market was valued at $2.7 billion.According to the Finance Ministry’s data, the total sales of foreign intangible goods and services stood at Rp 93 trillion ($6.6 billion) in 2018. Despite the large amount of money involved, the contribution of digital transactions in tax revenue remains insignificant. Unfortu...