Page 19 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)
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DDTC Working Paper 1717

                                           Figure 1. Suggested Path for Set of Researches Plan

                                                                                     BEPS behavior in general

                                                                                     MNEs profit shifting behavior
                                                                                     in certain sectors or industries

                                                                        What to      Profit shifting behavior through
                                                                        measure?     certain schemes (e.g. transfer
                        Macro approach               Micro approach                  price, debt financing, etc.)
                           Research                     Research

                                                                                     BEPS behavior into certain tax
                    •  Measuring BEPS
                       magnitude in aggregate
                    •  Identifying factors                                           BEPS behavior in certain
                                                                                     (group of) MNE(s)
                       influencing the
                                                                                     Measuring MNEs behaviors
                                                                                     after BEPS countermeasure
                                                                                     enactment(s) to evaluate the

                   would  potentially create new  loopholes and may   major determinants.  It also gives idea on what kind
                   create further  source of legitimate knowledge   of  circumstance that  would make such  practices
                   by  shaping  the  existing  epistemology  of  fiscal   nourished and sustained. Overall, it gives the sense
                   researchers. 56                                  of urgency for policy makers to counteract it. These
                                                                    approach can utilize two kind of data: CIT revenue
                      Thus,  a long-term  systematic research  plan
                                                                    and FDI. Doing these research, nonetheless, should
                   for measuring and  monitoring BEPS  along  with
                                                                    make extensive technical effort to differentiate
                   the countermeasures  in Indonesia  is  of  crucial
                                                                    the  data  movement  caused  by  artificial  financial
                   necessity. The  urgency for  policy makers  is  to
                                                                    practices and real business decision.
                   be intellectually prepared in anticipating  the
                   evolvement of BEPS schemes and MNEs behavior        Built  upon the  groundwork set by macro-
                   in the future. Not only that it would help in guiding   approach study, micro-approach ones  could set
                   researchers to have link one research with another,   a number  of  measurements  that could be made
                   it also  indicate the data requirement that  need   in way to reinforce each other findings or results.
                   to be provided in the future. It thus improves the   They could start examining the dimensions  of
                   efficiency and prevent data insufficiency when the   BEPS magnitude by measuring the scale of semi-
                   research needs to be conducted. A useful principle   elasticities due to the changes of factors providing
                   describing  path for research plan  is depicted by   incentives and disincentives for MNEs to artificially
                   Figure 1.                                        shift their profits. Afterwards, the research scope
                                                                    could  be  more  narrowed  into  specific  BEPS
                      Having the various currently available methods
                                                                    behavior in specific context and specific scheme as
                   reviewed with  promising potential  innovation
                                                                    well. The deliberation could be based on necessities
                   in  the future, several  preliminary principles that
                                                                    or presumption  on areas where such practices
                   could be valuable  to guide the research plan.
                                                                    might be heavily concentrated.
                   Basically, macro-approach  research  is  a good
                   epitome as a preliminary study before followed      These  studies  then could be used  to  give
                   by  micro-approach  studies.  It  first  confirms  the   insight  in evaluating  existing  countermeasures
                   existence of BEPS in the country, then it also gives   or making ones. Taking it further, micro approach
                   general  hint about  how BEPS reacts against the   could be used to  monitor  the  development of
                                                                    BEPS  behavior, particularly on how  it behaves
                                                                    against the countermeasures. In other  words,
                   56. David E. Gray, Doing Research in the Real World (London: SAGE
                   publications, 2004): 18-20.                      micro approach gives us advantage when it comes
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