Income Taxes for Trading Activities Made Through Electronic System in Indonesia as an Unilateral Measure

Indonesia has the fastest development of digital economy amongst other countries in Southeast Asia. As a country with a large population and internet users, Indonesian Government is trying to effectuate the imposition of the Income Taxes towards the foreign business actors in the trading activities by using Electronic System. This intention is amplified by the existence of Covid-19 pandemic. Since the social and physical distancing have fertilized the trend to conduct trading activities through the electronic system, and to provide a level playing field, then the policies for income tax in the trading activities utilising electronic systems was issued in the Law Number 2 of 2020. The application of this regulation is assessed based on the Tax Law in Indonesia by focusing on several aspects such as legal certainty and tax jurisdiction. Based on the tax philosophy in Indonesia, Law Number 2 of 2020 is considered as lacking in providing legal certainty and policies regarding the income tax for the trading activities utilising electronic system, it is considered as a unilateral measure.