Indonesia Discusses Tax Policies at 2nd International Tax Forum in Bali

The Indonesian Finance Ministry convened the 2nd International Tax Forum (ITF) in Kuta, Bali, from September 24 to 26, focusing on tax policies to address global economic challenges.

Febrio Kacaribu, head of the ministry’s Fiscal Policy Agency (BKF), emphasized the forum’s role as a vital platform for international diplomacy and coordination, facilitating bilateral meetings with Indonesia’s strategic partners. He expressed confidence that the forum would yield robust policy recommendations for navigating the complexities of international taxation.

In a remote address, Finance Deputy Minister II Thomas Djiwandono highlighted two significant global economic challenges. First, he pointed out the rapid advancement of digital technologies that allow multinational companies to generate substantial income in various countries without a physical presence.

Second, Djiwandono discussed the competitive pressures in the international tax system, which often lead to practices like Base Erosion and Profit Shifting (BEPS). He noted that countries involved in the Inclusive Framework on BEPS have agreed on the Pillar 2 solution, which incorporates the Global Minimum Tax and Subject to Tax Rules (STTR).

The Global Minimum Tax has already been adopted by over 40 countries, including Vietnam, Australia, Japan, and members of the European Union. Indonesia recently signed the STTR Multilateral Instrument on September 19, 2024. Djiwandono warned that failing to implement Pillar 2 could result in Indonesia losing potential tax revenues to other countries.

This forum aims to foster a fairer and more efficient global tax system, reflecting Indonesia’s commitment to active participation in international tax cooperation.

The Indonesian Finance Ministry held the 2nd International Tax Forum (ITF) in Kuta, Bali, from September 24 to 26, focusing on tax policies to tackle global economic challenges.

Febrio Kacaribu, head of the Fiscal Policy Agency (BKF), highlighted the forum’s importance for international diplomacy and collaboration, facilitating bilateral meetings with Indonesia’s key partners. He emphasized that the forum aims to develop effective policy recommendations for navigating complex international tax issues.

Finance Deputy Minister II Thomas Djiwandono, who participated remotely, addressed two pressing global economic challenges. He noted the rapid advancement of digital technologies enabling multinational companies to operate across borders without a physical presence, raising concerns about tax revenue losses for host countries.

Additionally, Djiwandono pointed out issues related to the international tax system, such as competition in tax rates leading to Base Erosion and Profit Shifting (BEPS). To combat these challenges, countries involved in the Inclusive Framework on BEPS have adopted the Pillar 2 solution, which includes the Global Minimum Tax and Subject to Tax Rules (STTR).

The Global Minimum Tax has been implemented by over 40 countries, including Vietnam, Australia, and several EU nations. On September 19, 2024, Indonesia joined other nations in signing the STTR Multilateral Instrument. Djiwandono cautioned that without implementing Pillar 2, Indonesia risks losing potential tax revenues to other countries.

This forum underscores Indonesia’s commitment to fostering a fair and efficient global tax system, aiming for enhanced cooperation in international taxation.