Indonesia joins global fight

against tax dodgers

Grace D. Amianti
The Jakarta Post
Jakarta | Thu, October 13 2016 | 07:53 am

The government reiterated on Wednesday its commitment to

combat tax avoidance practices, as nations around the world have
agreed to strengthen their respective taxation systems in an effort
to support local economies amid weakening global growth.
Finance Minister Sri Mulyani Indrawati said efforts to strengthen
international taxation mechanisms were the key points discussed in
a recent G20 meeting in Washington, DC, that were relevant to
Indonesia.
As part of a global effort to fight tax avoidance, Sri Mulyani said G20
members, including Indonesia, were expected to implement

measures introduced by the Organization for Economic Cooperation

and Development (OECD) against base erosion and profit shifting
(BEPS) schemes.
The OECD defines such schemes as tax avoidance strategies that
exploit gaps and mismatches in tax rules to artificially shift profits to
low or no-tax locations. Under the inclusive framework, more than
100 countries and jurisdictions are collaborating to implement the
measures and tackle BEPS strategies.
Sri Mulyani also said the OECD would work together with the intergovernmental anti-money-laundering body, the Financial Action Task
Force (FATF), to strengthen the fight against cross-border money
flows that allegedly had elements of tax avoidance and money
laundering related to criminal acts, such as drug and human
trafficking, as well as financing for terrorism.
It is very important to build a fair international taxation system
because it is impossible to build a global economy together while
developing countries face difficulties in tax collection that are due to
conditions in which it is easy for companies to avoid paying taxes,
she said.
The recent G20 meeting, which gathered finance ministers and
central bank governors from member countries, was held as a part
of an annual series of World Bank-International Monetary Fund (IMF)
meetings that ran from Oct. 4 to 9.
The G20 meeting also discussed the latest global trend of avoiding
taxes through legitimate transactions that were difficult to tax, such
as through e-commerce and in online markets, which continuously
posed complicated taxation issues for many governments.
Last month, Indonesian tax investigators visited the Jakarta office of
US internet giant Google as part of an investigation into the
companys suspected refusal to undergo a state audit of its tax
obligations.
Yustinus Prastowo, the executive director of the Center of Indonesian
Taxation Analysis (CITA), said the government should be able to
negotiate with Google as the UK government had been able to

negotiate with social media colossus Facebook, which as a result

paid 4.16 million (US$5.08 million) in taxes in the UK last year.
The UK government possessed accurate data on Facebook and
formed a new tax nomenclature through which it could force the
company to negotiate. We should also have accurate data on Google
operations and revenues in Indonesia in order to start negotiations,
he said.