Page 20 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)
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DDTC Working Paper 1717

                   to examine the effectiveness of countermeasures.   government  strategy  in  monitoring  specific  rules
                   Each countermeasure might require  different     that are needed and also which regulation becomes
                   research technique, moreover if the related BEPS   the loophole exploited by MNEs to artificially shift
                   practices is  directly linked  to hybrid  mismatch,   their profit.
                   which heavily depends on changes of tax system of
                   the associated countries.                           This  paper provides  introductory  guide or
                                                                    basic principle that  could be of consideration in
                      The mixture between macro and micro approach   setting the research plan.  Preliminarily, macro-
                   should be mapped in a way to have constructed    approach research is useful  to measure the
                   instruments that  could illuminate BEPS  behavior   magnitude of BEPS in overall. Currently available
                   that currently is still conundrum. The objective of   data that can be used include CIT revenue as the
                   the explained plot above is first to provide first step   basis to measure the government  loss due to
                   in gaining profound knowledge about the spread of   BEPS practices. Other variables can be utilized
                   BEPS  among various  sectors  and to examine the   to  help distinguishing  BEPS practices  from  usual
                   diverse  behaviors  along  with  the determinants.   investment  flow.  Subsequently,  micro-approach
                   Second,  which is also crucial, is  to have early   research is ideal to narrow the knowledge of BEPS
                   anticipation  about  necessary  data and actions to   behavior, particularly in identifying specific BEPS
                   be taken to make it feasible, including government   scheme or MNEs in certain sector. Research with
                   institution data and information coordination and   this methodology is also favorable to measure the
                   improving access to data, as explained in section   effectiveness of BEPS countermeasures, since each
                   5.3.                                             of them usually have their own specific purpose.

                   6.  Conclusion                                      More-specific plan is clearly needed to produce
                                                                    clearer  set  of  research  plan.  This  paper provides
                                                                    ground clearance as a opening step for  policy
                      The existence of BEPS is convincingly evident,
                                                                    makers in collecting scattered research with various
                   but  yet to be followed by the knowledge of its
                                                                    data and methodology that might help developing
                   magnitude  in  a  specific  country,  particularly
                                                                    research methodologies and build a set of research
                   Indonesia. Empirical  literatures so far are yet  to
                                                                    plan that can provide insightful knowledge not only
                   accurately measure the scale of the practices. The
                                                                    to provide effective BEPS  countermeasures, but
                   reason is basically three folds. First, substantively,
                                                                    also to help research methodologies advancement
                   it is difficult to incorporate all factors incentivizing
                                                                    into the next stage.
                   BEPS  practices into estimation model. Second,
                   technically, it becomes problematic in determining
                   the right sample and appropriate data type to
                   be used.  Third, data provision  is  still  limited  in
                      From  current assessment  on data and tools
                   availability, it is identified that several important
                   data for  research  purpose  are available,  but
                   not  accessible. For instance,  information from
                   corporate  tax  return,  corporate  financial  report,
                   tax  audit are all  available  but  strongly restricted
                   with  confidentiality  protection.  If  related  bodies
                   who collect those information could reform it into
                   anonymous information or loose the confidentiality
                   for restricted research purpose, it would potentially
                   bring huge contribution  to the development  of
                   BEPS and counter-BEPS measurement.

                      In  relation to that, a  set of research plan  is
                   thus essential  to ensure that  the knowledge
                   development would be built  in a structured
                   framework.  It  enables  government  (or  external)
                   researchers to anticipate necessary data  that  are
                   currently not available or not accessible. But more
                   importantly, such plan  would contribute to the
                   formulation process of effective countermeasures
                   in tackling BEPS. It could potentially support the
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