Value Added Tax: A Suitable Alternative for Taxing The Digital Economy? (Indonesian Context)
DOI:
https://doi.org/10.31092/jpi.v8i1.2775Keywords:
Value Added Tax, Digital Economy, BEPS Action 1, Pillar One, Amount A, International TaxAbstract
This study explores the appropriateness of using VAT to tax the digital economy in Indonesia, concentrating on the issues highlighted in the OECD's BEPS Action 1 report. Among the key challenges are the exemptions for low-value imports and remote digital services. The paper assesses these issues to gauge the effectiveness of VAT in addressing the taxation of Indonesia's digital economy. The study adopts a qualitative research methodology, utilizing OECD guidelines, Indonesian tax law, policy papers, and scholarly works to analyze the relevant tax challenges. Additionally, it considers VAT as both an alternative and a potential future supplement to Pillar One in the Indonesian context. The findings indicate that while Indonesia's VAT framework tackles certain digital economy challenges, concerns such as collection costs, system complexity, fairness, legal certainty, compliance, and enforcement persist. VAT is viewed as a practical temporary solution and a prospective complement to direct taxes under Pillar One, particularly in addressing gaps not covered by Amount A.
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