Directorate General of Taxes from the UK to charge Google Taxes
10:50 AM
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The Directorate General (Ditjen) of Taxes of the Ministry of Finance of the Republic of Indonesia held a bilateral meeting with the British tax authority, HM Revenue and Customs (HMRC) to discuss the issue of tax imposition for the Over The Top (OTT) digital business.
Director of International Taxes at the Directorate General of Taxes John Hutagaol said that during the meeting, HMRC England shared experiences of implementing Diverted Profit Tax (DPT) on the avoidance of OTT tax which is currently a viral topic in Indonesia and other countries. John said DPT can be one of the anti-avoidance rules to prevent tax avoidance practices by implementing artificial permanent establishment. This practice results in countries in which economic activity takes place not getting a share of taxation on earned income.
"The Directorate General of Taxes is studying the DPT provisions from the British HMRC which have been implemented since 2014," said John.
In the UK, the DPT rate is 25% or greater than the generally accepted tax rate. If this rule is implemented, OTT must pay taxes first, even though they later file an appeal to the court,
"DPT will be subject to an official assessment if the taxpayer does not comply in the following year," he said.
In the UK, diverted profit tax has been able to force companies like Google and Facebook to pay taxes. The scheme allows Britain to levy a tax on profits or royalties even when it has been diverted to another country with loose taxation rules. However, according to John, to be implemented in Indonesia, the implementation of the DPT must have a legal connection.
"The DPT Rule can be proposed in the revision of the Income Tax Law (PPh)," he said.
Executive Director of the Center for Indonesia Taxation Analysis (CITA) Yustinus Prastowo said, if implemented in Indonesia, the DPT will create a new type of tax outside of income tax.
"Actually, if the rules for Permanent Establishment (BUT) have been revised in accordance with the OECD, that is enough, there is no need for DPT implementation," he said.
Basically, the DPT is to provide pressure on the taxpayers so that the taxpayers choose to recognize the Permanent Establishment and pay normal taxes. Apart from the OTT tax, the meeting on March 7 2017 in London discussed the preparation for the implementation of Anti Base Erosion & Profit Shifting (BEPS Deliverables) and Automatic Financial Information Exchange (AEol).
"Globalization and the aggressive practice of tax planning by multinational companies and wealthy individuals have eroded the tax base in each country," said John.
Kontan, Page 2, Thursday, March 9,2017
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