Sri Mulyani Laments Tax Evasion Involving Digital Companies

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Mahinda Arkyasa

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  • TEMPO.CO, JakartaFinance Minister Sri Mulyani Indrawati talked about the phenomenon involving digital companies and tax evasion that has happened in a number of countries in a virtual seminar with the Supreme Audit Agency (BPK) on Tuesday, June 15, 2021. Sri said that these companies would generally evade paying taxes by moving jurisdictions to countries with lower tax rates.

    "Digital companies easily avoid tax by moving jurisdictions to nations with low tax rates, especially to the United States, Europe, and North Irland," said Sri Mulyani in the discussion on June 15. "Because the latter has a nearly 0 percent corporate income tax."

    She said such practices have caused tax base erosion, which is being discussed and followed up in the G7 summit. Mulyani recalled that US President Joe Biden and secretary of treasury Janet Yellen agreed to issue the global minimum taxation policy of 15 percent, which can potentially become an international consensus and affect Indonesia. 

    In the previous G20 summit, member countries discussed the two tax consensus pillars consisting of a unified approach and global anti-base erosion (GloBE) which also talked about digital companies located in a big revenue country but are yet to have a physical office. 

    Sri Mulyani believes that companies with no physical representation in a certain country should at least be taxed at a certain level and such a formula is being discussed with the directorate general of taxation. 

    FRANCISCA CHRISTY ROSANA