- Yon Arsal, an expert in tax compliance at the Ministry of Finance, is predicting that the global agreement on minimum taxation ("Global Agreement") for multinational companies that is set to enter into effect in 2023 will ultimately affect the values of the incentives which can be offered to business actors, which include tax allowances and tax holidays. Mr. Arsal also stated that this change in incentives would not only be seen in Indonesia but would affect the whole world.
- According to Mr. Arsal, the Coordinating Ministry of Economic Affairs and the Investment Coordinating Board will jointly review the impact of the Global Agreement upon the various types of tax incentives that are currently used to draw businesses to invest in Indonesia. Mr. Arsal also further affirmed that other incentives aside from tax holidays and allowances would also be affected by the new global tax consensus.
- The Head of Indonesia’s Fiscal Policy Agency, Febrio Kacaribu, had previously stated that 136 member countries of the G20 had already approved the so-called Two-Pillar Solution in order to overcome tax challenges within the digital economy. Under the Two-Pillar Solution, multinational companies with Annual Gross Turnovers (Peredaran Bruto Tahunan) in excess of EUR 750 million or more will be subject to the imposition of a minimum tax tariff in an effort to eliminate unfair tariff competition between G20 countries.
- The Two-Pillar Solution, also known as the Global Anti-Base Erosion (GLoBE) rules, will hopefully ensure that multinational companies are subject to a minimum tax rate of 15%. In addition, based on the OECD report, the Two-Pillar Solution should protect the right of developing countries to impose a minimum tax of 9% upon certain types of income (such as interest and royalties). (ANT)
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