Page 13 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)
P. 13

DDTC Working Paper 1717

                      Nonetheless,  similar to macro approach,      in prioritizing countermeasures formulation  in
                   this  one  can  also  treat  CIT-rate  difference  as  the   certain area.
                   factors  motivating BEPS activities.  For  instance,
                                                                       On the third base, which is in terms of country
                   a research could be designed in a way to examine
                                                                    destination for BEPS practices, vital differentiation
                   the  relationship  between  CIT-rate  differences  to
                                                                    should  be  made  at  least  in  two  aspects:  first,
                   reported profit in MNEs. This way, we can identify
                                                                    adjustment  regarding  relevant  affiliated  MNEs
                   the semi-elasticity of profit MNEs due to the changes
                                                                    existed between destination and home countries.
                   of CIT-rate differences between the two affiliated
                                                                    Affiliated  MNEs  in  home  country  have  their
                   countries. On the other hand, we can also add BEPS
                                                                    affiliated MNEs located in different countries, with
                   counter measures – for example, GAAR or SAAR –
                                                                    each MNEs might have distinct characteristics
                   to see the influence of these policy in countering
                                                                    that are important to the formulation of research
                   BEPS. In other words, we put the counter measures
                                                                    design.  Therefore, determining  the magnitude
                   representing the factors that create disincentives
                                                                    of  profit  shifting  to  specific  country  require
                   for  MNEs  to  shift  their  profit.  Similar  effort  has
                                                                    comprehensive knowledge about MNEs corporate
                   been done by Kristiaji (2015), using the financial
                                                                    structure and their business nature. Second, which
                   data of affiliated MNEs in developing countries.
                                                                    is more important, is incorporating the mismatch
                      Micro approach has plentiful ways in tailoring   or loopholes existed between home countries and
                   the methods to measure BEPS activity, depending   destination countries’ tax system. By considering
                   on  the necessities  of  the research  goals. Broadly   these  two elements, research  design  could be
                   speaking, we can divide  them into three  bases:   specifically  adjusted  to  measure  specific  BEPS
                   based on  certain BEPS  scheme, nature of MNEs   scheme to certain destination.
                   business  structure, and countries  destination for
                   shifting  the  profits.  On  the  first  base,  depending   These  three  basis for  differentiating  the
                   on which  BEPS  scheme  it tries to refer, relevant   research design and scope  may be of crucially
                   research design could be adjusted to incorporate   importance. We can get to narrowed  BEPS
                   the  particularities of attributes related to the   scheme  to be mapped and focused  BEPS  actors
                   BEPS scheme. The right tool for measuring BEPS   to be targeted, and from which we can produce
                   practices would be  different  between the ones   a  result  that  can  give insight  on what  kind of
                   that  done  through transfer  pricing and the ones   countermeasures  that  could effectively eradicate
                   that  done  through  debt  financing.  Particularly,   the  practices. Additionally,  it  also  enable  the
                   identifying BEPS behavior done through tax treaty   government  to  formulate  the  countermeasures
                   shopping also requires different method, as done   more efficiently. Davies et al (2014) finds that BEPS
                   by Weyzig (2013).  This way, we can identify the   practices is strongly practiced by certain large
                   specific  behavior  of  MNEs  in  considering  certain   MNEs in certain countries.  This is in contrast with
                   BEPS scheme.                                     general  presumption  which perceive that  every
                                                                    MNEs have similar behavior in shifting their profit,
                      On  the second  base,  regarding the MNEs     thus concluding BEPS is widely practiced by many
                   sector,  research  scope can  be  narrowed to MNEs   MNEs. Acknowledging BEPS behavior and decision-
                   operating  in certain sectors  or criteria. Beer  and   makings from certain main actors comprehensively
                   Loeprick (2015) tried this method by investigating   would then  potentially give  government  valuable
                   firm-specific  profit  shifting  determinants.  They   ideas  on benchmarking other  actors.  This  way,
                   find  result  which  may  provide  insights  on  the   the government could produce countermeasures
                   design of anti-avoidance approach. This could be   in  efficient  and  effective  way.  In  sum,  insightful
                   a handful  research  when  government has prior   researches  that have been previously done  are
                   indication about certain sector in which the MNEs   summed in Table 2.
                   have low compliance level or low reported profit
                                                                       However, we should keep in mind that certain
                   that is dubious enough to be presumed that there
                                                                    BEPS scheme  could involve  more  than two
                   are  profit  shifting  practices.  Having  this  kind  of
                                                                    countries. We should first define the definition of
                   research would give direct use for policy makers
                                                                    term ‘destination’. It  is possible  that  the country
                                                                    into  which  profit  is  shifted  could  act  just  as  an
                   38. See, for example, Jarle Moen, Dirk Schindler, Guttorm Schjelderup,
                   and Julia Tropina, “International Debt Shifting: Do Multinationals Shift   intermediary  country,  not  the  final  destination
                   Internal or  External  Debt?”  ,  CESifo  Working Paper  Series  No.  3519
                   39.  Francis Weyzig,  Taxation  and  Development:  Effects  of Dutch  Tax   41. Lihat Ronald B. Davies, Julien Martin, Mathieu Parenti, and Farid
                   Policy on Taxation of Multinationals in Developing Countries (Enschede:   Toubal, “Knocking on Tax Haven’s Door: Multinational Firms and Transfer
                   Ipskamp Drukkers, 2013), 89-115.                 Pricing”, CEPII Working Paper No. 2014-21 (2014): 10-18.
                   40. Sebastian Beer and Jan Loeprick, “Profit Shifting: Drivers of Transfer   42. Lihat Peter Egger, Christian Keuschnigg, Valeria Merlo, dan Georg
                   (Mis)Pricing and the Potential of Countermeasures”,  International  Tax   Wamser, “Corporate Taxes and Internal Borrowing within Multinational
                   and Public Finance No. 22(3) (2014).             Firms”, American Economic Journal No. 6(2) (2014): 26.
   8   9   10   11   12   13   14   15   16   17   18