IMPLEMENTATION OF TAX REGULATIONS ON INTERNET-BASED BUSINESS ACTIVITY CASE STUDY: GOOGLE'S TAX AVOIDANCE IN INDONESIA

摘要

To align with global and digital economic growth, businesses must be able to change competitive strategies and business models to keep them relevant to on-going developments. This also requires changes in government regulations, especially tax regulations in order to support business development. Google as a company providing Internet-based services and products, located in Singapore as regional office, conducts its business in Indonesia by utilizing tax treaty between Indonesia and Singapore in its tax planning scheme aimed at avoiding taxation. In Indonesia, Google only has a representative office that does not record revenues and profits derived from activities in the country. This study aims to first find out why Google is not willing to pay the income or profits derived from business activities in Indonesia, Second knowing what should be done by the government of Indonesia to Google to pay tax to the government of Indonesia. The research method used is normative juridical. Based on the results of the study, the existing tax regulation cannot support new business model that is internet based business model. This cause the tax liability paid in Indonesia is inconsistent with revenue derived by Google from Indonesia. It is required significant changes on tax regulations that can be applied in internet-based business model. However, this application presents several obstacles, so the Indonesian government can learn from countries, including Britain, India and Australia in applying this tax regulation.