Page 2 - Working Paper (Multinational Firms Losses and Profit Shifting Behavior in Indonesia: Some Comments)
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Multinational Firms’ Losses

                                  and Profit Shifting Behavior

                                                                             in Indonesia:

                                                                                     Some Comments:

                                  B. Bawono Kristiaji*       1                TABLE OF CONTENTS

                   Corporate  income  tax  is  one  of  the
                   major tax  revenue sources  in Indonesia.
                   Up  to  January  2015,  more  than  4000
                                                                             1.  Background .............  3
                   multinational  corporations  or  firms  that
                   their shareholders or ultimate owner are
                                                                             2.  Financial Loss
                   foreign entities (Penanaman Modal Asing/
                                                                                in Business
                   PMA),  suffered  lossess.  This  situation                   Framwork ................  3
                   made them did not pay their income tax.
                                                                             3.  Financial Loss
                   Some say this is happened because of the                     as Profit Shifting
                   macroeconomic  downturn  and  business
                                                                                Strategy ...................  4
                   environment,  the others  murmur about
                   the worries of behavior of profit shifting
                                                                             4.  What Should We
                   in undertaking. In this paper, tax and non-
                                                                                Do? ..........................  7
                   tax motives of multinational firms’ losses
                   will be elaborated. Financial loss become
                                                                             5.  Conclusion ...............  9
                   the issue that will be described in business
                   framework,  also  will  be  framed  as  profit
                   shifting strategy.

                   Furthermore,     how     Government      of
                   Indonesia  (Directorate  General  of  Taxes/
                   DGT)  should  react  on  those  particular
                   issues?  Should  DGT  have  effective  anti-
                   avoidance rules and  improve their tax
                   administration  system?  Detail  rules  and
                   administration strategy will be beyond the
                   scope of this paper.

                   *B. Bawono Kristiaji is partner in Tax Research & Training Services,
                   DANNY DARUSSALAM Tax Center. He received his bachelor and master
                   degree in economics from University of Indonesia. He obtained his MSc in
                   international business taxation from Tilburg University, the Netherlands.
                   He holds Advanced Diploma in International Taxation (ADIT) from The
                   Chartered Institute of Taxation (CIOT), United Kingdom.


                   The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or
                   entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate
                   as of the date received or that it will continue to be accurate in the future. The author’s views expressed in this Working Paper do not
                   necessarily reflect of the views of DANNY DARUSSLAM Tax Center. Working Papers describe research in progress by the authors and are
                   published to elicit comments and to further debate.
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