Fair and Transparent Taxation in the Digital Age

Enhancing the taxation system in a fair, transparent, and efficient way in the new digital world is essential for countries looking to invest in their human capital, said Karishma Vaswani, Correspondent for BBC Asia Business and moderator of the dynamic event ‘Fair and Transparent Taxation in the Digital Age’ in Bali, Indonesia. Leaders from government, private sector, civil society, and academia gathered to explore the implications of technology on countries’ efforts to mobilize domestic resources to fund the Sustainable Development Goals.

Suahasil Nazara, Head of the Fiscal Policy Agency, Ministry of Finance in Indonesia, said he can’t imagine tax collection without using technology and that his country is working to leverage digital technology for fair and transparent taxation.

Any effective taxation requires public trust. Governments have to be more transparent and accountable, emphasized Natalia Soebagjo, (International Board Member of Transparency International and board member  of the Centre for Strategic and International Studies in Jakarta). Governments should also ensure fair taxation so that local digital enterpreneurs can compete with global firms.

Akhilesh Ranjan, Principal Chief Commissioner of Income Tax in India, shared how India’s equalization tax allows taxation of payments to foreign-based digital service providers without violating tax treaties. He added more work needs to be done as this solution does not solve all issues.

Taxation in the digital age is not just about taxing big firms that provide services via the internet.  As Alvin Mosioma, CEO of the Tax Justice Network, Africa pointed out, virtually all economic activity is digitalized, with broad implications for taxation. He added that to fairly and transparently tax the digitalized economy, we have to ask three questions: what to tax, how to tax, and where to tax.

Experts agreed on the key message that more work needs to be done for a global understanding and consensus around taxation in the digital age.