Income Tax Policy Over Digital Companies: Study in Indonesia

Abstract

This study was conducted to examine and find the application of the digital company’s Income Tax imposition based on the principle of effectivity. In addition, this study was also carried out to determine the Income Tax Regulation on digital companies to realize tax sovereignty in the digital economy era, especially for Indonesia. To obtain data and information in this study, the authors used qualitative research methods. Considering that income tax has been regulated in Indonesian laws, this study uses a juridical normative approach, without neglecting empirical facts that occur in the development of the digital economy. The constraints of digital company income tax in Indonesia can be categorized into three main things, namely tax awareness, rational attitude, and the condition of tax law in Indonesia. To overcome this, the government can determine policies that are comprehensive in nature regarding digital company services both regarding the rights and obligations of operating in Indonesia, including regarding income tax obligations by taking into OECD consensus.