Digital Economy and Taxation: Ensuring Fairness for Source Countries

Purpose: This study aims to understand the digital economy and taxation required to ensure fairness for source countries. Design/methodology/approach: This discourse analysis uses content analysis by tracing and analyzing the words (text) in a digital tax policy, which carries the principles of fairness. Findings: The results of the content analysis in the form of words contained in the digital tax policy in Indonesia fulfil the principles of fairness. The appointment of 181 multinational corporations as collectors of value-added tax (VAT) demonstrates the fairness of tax subjects in the country of the source of income and in the country of residence. This study concludes that Indonesia’s digital tax policy does not cover taxation of multinational corporate profits. Thus, the principles of fairness have not been optimally implemented from the perspective of a country’s income sources. OECD Pillar 1 emphasises the right to tax digital transactions from source countries, especially developing countries, but does not fully guarantee the principle of justice. The OECD further issued OECD Pillar 2 as an alternative to fulfil the taxation rights of source countries. Research limitations/implications: This study has limitations in the application of tax collection principles that only use two principles, namely, certainty and fairness. This study has both theoretical and practical implications. Theoretically, the principles of fairness in digital tax policies are developed from the perspective of income-source countries. Practically, it is an alternative to realize a fair taxation policy and provide legal certainty for incomesource countries. Originality/value: The latest research is presented on the principles of certainty and fairness of digital transaction policies, as seen from the source country.