Literature Review on Digital Service Tax as Reference for New Business Model in Indonesia

Technological development is one of the triggering factors of market globalization and production globalization. Market globalization has made the national market into a global market unit called international trade. The presence of the internet in international trade has led to the emergence of digital goods and services transactions. The challenge in this digital transaction relates to the imposition of tax. Digital transactions can be transactions between countries that involve international taxes. Digital transactions do not require the existence of economic substance (permanent establishment) to conduct transactions. At present the Organization for Economic and Cooperation Development (OECD) is developing regulations on taxation of digital transactions. This is done to prevent tax fraud committed by multinational web based firms. The Indonesian government has issued Regulation of the Minister of Finance of the Republic of Indonesia Number 210 / PMK.010 / 2018 which regulates the tax treatment of trade transactions through electronic systems (e-commerce). It was revoked before it became effective because of the pros and cons of its imposition. The purpose of this study is to examine the taxation rules for digital transactions in other countries and analyze the use of these rules as a reference in Indonesia. The results showed that several countries have developed regulations related to taxation of digital transactions that apply in their respective countries. Most include taxes on digital transactions in the Value Added Tax (VAT) object. But not a few countries also include these taxes in the Good and Service Tax (GAT). Keywords—international trade, digital tax, web tax, and