Adopting Pillar One: an ideal model for the transformation of Indonesia’s Tax Law to realize SDGs goal XVII and it’s challenges

The digital economy has triggered conflicts over the taxation of transnational economic activities. The international tax principles contained in the Double Taxation Avoidance Agreement (DTAA) are no longer considered relevant to the digital economy. The OECD introduced the ‘physical presence’ approach, particularly Pillar One, offering hope for Indonesia to develop domestic regulations that address digital economic activities. Against this context, this research aims to examine the ideal model of adopting the Pillar One in Indonesian domestic law as a step to support the achievement of the 17th goal of the SDGs and analyze the potential challenges that may surface in its implementation. This study uses a normative juridical approach with literature study techniques to collect relevant secondary data. The results show that the adoption of Pillar One in the form of a law shown as an ideal model for Indonesia because it is in accordance with the principle of legal hierarchy accuracy and addresses the concerns of distortion of democracy. However, this adoption poses challenges, mainly related to the long bureaucracy in the formation process as well as the need for adequate technology, information, and communication infrastructure in the implementation stage.