BERITA TERKINI
MALANG, DDTCNews - Tax policies in the digital economy pose challenges for countries across the globe. These challenges ultimately converge into 3 key issues.
First, the ability of economic entities to operate in a country without a physical presence. Second, the complexity of allocating jurisdiction to tax across states. Third, the limitations of regulations and administrative infrastructure in implementing tax collection and payment for the digital economy.
“The combination of these factors varies depending on the business model. Through digitalisation, a wide range of business models can emerge,” said Denny Vissaro, Manager of DDTC Fiscal Research & Advisory, during the international webinar of the 3in1 Taxation Study Programme at Brawijaya University, Friday (23/5/2025).
In analysing digitalisation in the economy, there are a minimum of 3 aspects to consider: the products, the payment/transaction mechanisms and the platform. From these, it can be determined whether digitalisation applies to the products, the payment system, the platform or a combination of all three.
“Digitalisation of products and payment models results in different tax treatments. Hence, we must first examine the business model, as the applicable tax rules may vary,” Denny explained.
To address these challenges and broader global tax issues, jurisdictions worldwide have pushed for an international tax consensus, resulting in Pillar 1 and Pillar 2.
Pillar 1 aims to redistribute the jurisdiction to tax more fairly to market jurisdictions. On the other hand, Pillar 2, which includes the Global Anti-Base Erosion (GloBE) rules, seeks to reduce tax competition and protect tax basis through the implementation of a global minimum corporate income tax rate.
In principle, the Two-Pillar Solution is expected to bring stability to the international tax system. Pillar 2 ensures that large multinational enterprise (MNE) groups pay a minimum level of tax in every jurisdiction where they operate.
Under the agreed rules, the global minimum tax applies to MNE groups with consolidated global revenue of a minimum of EUR750 million. The minimum effective tax rate set under the global consensus is 15%.
“From a policy perspective, the OECD Two-Pillar Solution is a key option for taxing the digital economy in today’s global landscape,” Denny noted.
However, taxpayers must anticipate the implications of the Two-Pillar Solution, particularly in terms of compliance governance and intercompany interactions within a group. Proper mitigation is essential to assess the extent to which companies can satisfy these requirements.
At the same time, the implementation of the global minimum tax raises questions about the effectiveness of existing tax incentives. In Indonesia’s context, Denny continued, the global minimum tax does not necessarily erode the country’s competitiveness.
Instead, the government needs to design an incentive framework aligned with global minimum tax rules. Comparatively, there is no widespread indication that countries are withdrawing their tax incentives.
The government, he added, now faces the urgency of mitigating the impact of the global minimum tax on the investment climate. Rather than eliminating existing incentives, such as tax holidays, it should focus on evaluating and refining current policies.
On an important note, tax incentives and the global minimum tax should not be seen as mutually exclusive. The government must continue to strike a balance between supporting investment and maintaining sustainable fiscal revenues.
“Tax incentives remain attractive. The challenge lies not only in tax savings but also in their simplicity and certainty. From a political economy perspective, these incentives need to be maintained to safeguard the investment climate,” Denny concluded. (sap)
