ANALISIS PENERAPAN CONTROLLED FOREIGN COMPANY RULES DALAM MENGATASI BASE EROSION AND PROFIT SHIFTING DI INDONESIA

INFO ARTHA ◽  
2017 ◽  
Vol 3 ◽  
pp. 1-14
Author(s):  
Alfa Mightyn ◽  
Arifah Fibri Andriani

One cause for the inability to achieve the expected tax revenue target for some last years was the practice of tax avoidance. One form of tax avoidance is the utilization of Controlled Foreign Company (CFC) to defer the recognition of income from overseas over WPDN capital to be taxed in the country. This practice is also faced by many other countries in the world. The issue of the Base Erosion and Profit Shifting (BEPS) has been of concern to developed and developing countries. G20 countries cooperate with OECD to form a BEPS Project to formulate measures to address these BEPS. Indonesia as one of the Associate Members of the Project BEPS has a position that is parallel to the other OECD countries and participates in implementing the BEPS results. BEPS Project has resulted in BEPS Action Plans which one of them is Action 3: Strengthening CFC Rules. Action 3 will provide recommendations to the domestic law related to the design of CFC Rules. Until now, related to Action 3, BEPS Project has issued a Public Discussion Draft Action 3: Strengthening CFC Rules. This draft is divided into seven "building blocks" required for CFC Rules to be effective. The aim of this study is to analyze the effectiveness of CFC Rules in Indonesia, whether it is sufficient to prevent BEPS. After that, we can determine what steps should be taken by Indonesian tax authorities to strengthen the CFC Rules in Indonesia based on seven dimensions of building blocks. The conclusions of this study are (1) CFC Rules in Indonesia as a whole have not been able to overcome BEPS; and (2) When compared with the recommendations of the Discussion Draft Action Plan 3, CFC Rules Indonesia needs to be improved. However, the necessary improvements should be adjusted to match the needs and characteristics of Indonesia. 

2016 ◽  
Vol 2016 (2) ◽  
pp. 87-112 ◽  
Author(s):  
Peter Koerver Schmidt

Abstract Recently, the controlled foreign company (CFC) rules have gained increased attention; as such, rules play an important role in the ongoing efforts of the OECD/G20 and the European Commission with respect to addressing base erosion and profit shifting (BEPS). In this context, the article revisits the CFC regimes of the Nordic countries in order to assess whether these regimes are in line with the recommendations from the OECD/G20 and to determine whether Sweden, Finland, and Denmark, as EU member states, will have to make amendments if the commission’s proposal for an Anti-Tax Avoidance Directive is adopted in its current form. It is concluded that the Nordic CFC regimes in many ways already are in line with the recommendations as well as the directive, but also that certain amendments have to be made.


Legal Ukraine ◽  
2020 ◽  
pp. 36-47
Author(s):  
Volodymyr Korol

The article is dedicated to the general aspects and peculiarities of the EU Member States legislation harmonization aimed at preventing avoidance of taxation by multinational companies through foreign entities or permanent establishments controlled by parent companies themselves or together with their associated enterprises. On the reasonable basis, the special emphasis was placed on the act of secondary legislation playing the key role in this important area, namely, Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market with regard to the controlled foreign companies rules. This Directive came into force on 1January 2019 and became an integral part of EU Anti-Tax Avoidance Package. Harmonization at the regional European level is being provided and, consequently, in-depth researched in the context of OECD/G-20 global Action Plan on Base Erosion and Profit Shifting. From methodological point of view, OECD Final Report on Action 3 BEPS was accepted as the analytical prism allowed the quintessence of constitutive rules of above mentioned EU Anti-Tax Avoidance Directive to be discovered properly. Accordingly, the comparative analysis was conducted through the lens of provisions of vast majority of aforesaid Final Report’s building blocks, more specifically, Rules for defining a CFC, Definition of CFC Income, Rules for computing income as well as CFC exemptions and threshold requirements, in particular, relating tax rate exemption, anti-avoidance requirement, de minimis threshold. Focusing attention on different important aspect related to CFC Income, it’s discovered special considerations of non-distributed income inclusion in the Member State taxpayer’s tax base of certain categories of passive income (interest, royalties, dividends, income from financial leasing, banking, invoicing companies, etc.) or arising from non-genuine arrangements with correlation, respectively, to entity and transaction approaches. Without limiting the foregoing, it’s discovered some argumentative issues considering European researchers as weaknesses of ATAD. It’s offered an illustration cause and effect relationship between non-recognition of passive income to be attributed to controlling parties and CFC’s substantive economic activity as far as there is reason to believe that it refuses to honor case law of the Court of Justice. Key words: controlled foreign company, passive income, substantive economic activity, non-genuine arrangement.


Author(s):  
Rebecca Reineke ◽  
Katrin Weiskirchner-Merten

This study examines how spillovers affect a multinational company's choice of an intangible's location and the corresponding transfer price for using this intangible. Our model uses a company with a domestic division in a high-tax country and a foreign division in a low-tax country, where each division's activities generate spillovers on the other division's income. In contrast to previous studies, our analysis incorporates an intangible's optimal location when the company trades off tax minimization and efficient activities. By locating the intangible abroad, the company reduces its tax liability, whereas locating the intangible domestically yields more efficient domestic division activities. For a high spillover of the domestic division, the company locates the intangible domestically. Our model supports empirical evidence regarding intangibles' location that is interpreted as "home bias". Additionally, we show how variations in regulatory parameters-arm's length range and tax rate differential-affect the divisions' activities and the intangible's location.


2021 ◽  
pp. 26-32
Author(s):  
Stephen R. Connor

This chapter describes all aspects of policy, including definitions, who is it that sets policy, how policy is made, how policy is implemented, the elements of effective policies, the differences between policies and regulations, the policies that are important for palliative care, global versus national policy differences, and barriers to the creation and implementation of palliative care policies. Understanding policy is important, as it is one of the fundamental building blocks of palliative care under the World Health Organization’s public health model. This model underscores the pre-eminence of policy, as it makes possible all the other elements. Palliative care professionals should understand the complexity inherent in policy and embrace it as an important area to master.


2016 ◽  
Vol 18 (1) ◽  
pp. 89-115 ◽  
Author(s):  
Umesh Rao Hodeghatta ◽  
Sangeeta Sahney

Purpose – This paper aims to research as to how Twitter is influential as an electronic word-of-mouth (e-WOM) communication tool and thereby affecting movie market. In present days, social media is playing an important role in connecting people around the globe. The technology has provided a platform in the social media space for people to share their experiences through text, photos and videos. Twitter is one such online social networking media that enables its users to send and read text-based messages of up to 140 characters, known as “tweets”. Twitter has nearly 200 million users and billions of such tweets are generated by users every other day. Social media micro-blogging broadcasting networks such as Twitter are transforming the way e-WOM is disseminated and consumed in the digital world. Twitter social behaviour for the Hollywood movies has been assessed across seven countries to validate the two basic blocks of the honeycomb model – sharing and conversation. Twitter behaviour was studied for 27 movies in 22 different cities of seven countries and for six genres with a total tweets of 9.28 million. The difference of Twitter social media behaviour was compared across countries, and “sharing” and “conversation” as two building blocks of the honeycomb model were studied. t-Test results revealed that the behaviour is different across countries and across genres. Design/methodology/approach – The objective of the paper is to analyse Twitter messages on an entertainment product (movies) across different regions of the world. Hollywood movies are released across different parts of the world, and Twitter users are also in different parts of the world. The objective is to hence validate “conversation” and “sharing” building blocks of the honeycomb model. The research is confined to analysing Twitter data related to a few Hollywood movies. The tweets were collected across nine different cities spanning four different countries where English language is prominent. To understand the Twitter social media behaviour, a crawler application using Python and Java was developed to collect tweets of Hollywood movies from the Twitter database. The application has incorporated Twitter application programming interfaces (APIs) to access the Twitter database to extract tweets according to movies search queries across different parts of the world. The searching, collecting and analysing of the tweets is a rather challenging task because of various reasons. The tweets are stored in a Twitter corpus and can be accessed by the public using APIs. To understand whether tweets vary from one country to another, the analysis of variance test was conducted. To assess whether Twitter behaviour is different, and to compare the behaviour across countries, t-tests were conducted taking two countries at a time. The comparisons were made across all the six genres. In this way, an attempt was made to obtain a microscopic view of the Twitter behaviour for each of the seven countries and the six genres. Findings – The findings show that the people use social media across the world. Nearly 9.28 million tweets were from seven countries, namely, USA, UK, Canada, South Africa, Australia, India and New Zealand for 27 Hollywood movies. This is indicative of the fact that today, people are exchanging information across different countries, that people are conversing about a product on social media and people are sharing information about a product on social media and, thus, proving the hypothesis. Further, the results indicate that the users in USA, Canada and UK, tweet more than the other countries, USA and UK being the highest in tweets followed by the Canada. On the other hand, the number of tweets in Australia, India and South Africa are low with New Zealand being the lowest of all the countries. This indicates that different countries’ users have different social media behaviour. Some countries use social media to communicate about their experience more than in some other country. However, consumers from all over the world are using Twitter to express their views openly and freely. Originality/value – This research is useful to scholars and enterprises to understand opinions on Twitter social media and predict their impact. The study can be extended to any products which can lead to better customer relationship management. Companies can use the Internet and social media to promote and get feedback on their products and services across different parts of the world. Governments can inform the public about their new policies, benefits of governmental programmes to people and ways to improve the Internet reach to more people and also for creating awareness about health, hygiene, natural calamities and safety.


World ◽  
2021 ◽  
Vol 2 (2) ◽  
pp. 267-295
Author(s):  
Lijun Zhao ◽  
Angelina Karaivanova ◽  
Pengfei Zhang

The current rules on international tax do not function properly due to the gaps which allow for tax manipulation. Whereas most tax agreements largely contribute to the prevention of double taxation, they do not effectively approach double non-taxation matters arising from tax competition based on the agreements’ bilateral nature. In order to tackle this issue, the Base Erosion and Profit Shifting project was introduced. Developed under the Organization for Economic Co-Operation and Development framework, the Base Erosion and Profit Shifting project deals with tax avoidance practices that use mismatches and gaps in tax rules. Nevertheless, the success of this new soft law initiative requires a forum that can promote and enforce its recommendations. The structural nature of the Organisation for Economic Co-operation and Development has led to the consideration of the World Trade Organization to be this forum by many. However, the World Trade Organization covered agreements are drafted in a way that includes some of the tax competition matters but not others, including traditional tax havens. This paper aims to bridge the gaps in the area of the international tax regime. By examining the international trade and international tax regimes, it is shown that there is space for variations in the World Trade Organization broadly drafted agreements for such matters to find a resolution. It is argued that the World Trade Organization can play a complementary role in the enforcement of the new international tax rules.


2020 ◽  
Vol 9 ◽  
pp. 596-610
Author(s):  
Bülent Akkoyun ◽  
Saime Uyar

After the pandemic of COVID-19 and refugee problems that took hold of the world, the citizens and administrations of each country have been trying to survive by becoming nearly closed systems. This situation brought forward the societies that create the countries and their culture, which is the most important element of the societies, and deeply affected them. For this reason, it has been inevitable to examine the theoretical studies carried out so far. In this study, which has an interdisciplinary feature, it is aimed to reveal the effects of societies, which is the most extensive and widest one among organized structures and cultural differences, which constitute the basic building blocks of societies on the refugee and pandemic crisis management of countries. For this purpose, after making a theoretical evaluation of some societies in the light of studies conducted based on cultural differences, it has been revealed that these differences have strong effects on refugee and pandemic crisis management. On the other hand, communities and their cultures were also significantly affected by predicting that it would be permanent. To reach this result, a method with the lowest margin of error and art discipline was used as a methodology.


2020 ◽  
Vol 20 (2) ◽  
pp. 376
Author(s):  
Novita Sari ◽  
Elvira Luthan ◽  
Nini Syafriyeni

The biggest source of state income comes from taxes. So the Indonesian government continues to strive to improve tax revenue optimization measures to maximize revenue from the tax sector. But until now many citizens still consider tax as a burden. The company or entity still considers tax as an expense that will reduce the company's net profit. Taxpayers will tend to look for ways to reduce the tax they pay, both legally and illegally, one of which is the practice of tax avoidance Tax avoidance is a complex and unique problem because on one hand tax avoidance does not violate the law, on the other hand tax avoidance is not wanted by the government because it reduces income for the country. The purpose of this study is to analyze the effect of profitability, leverage, the proportion of independent commissioners, institutional ownership, and company size, on tax avoidance. The population of this research is the entire manufacturing company registered in indonesia stock exchange (BEI ) 2014-2018 during the period.A method of sampling nonprobability using methods with techniques of sampling purposive sampling .The technique of analysis of data using the test is the classic normality, multikolinieritas,  heteroskedastisitas test, and autokorelasi  test. Testing the hypothesis of the use of regression analysis double. The results of the study show that there is an influence between profitability and the proportion of independent commissioners on tax avoidance, while the variable leverage, institutional ownership and firm size do not show an influence on tax avoidance.


2015 ◽  
Vol 64 (2) ◽  
Author(s):  
Marco C. Melle

AbstractOn July, 19th, 2013 the OECD published an „Action Plan on Base Erosion and Profit Shifting“, a catalogue of 15 actions against the tax avoidance strategies of multinational companies. The intention of the present paper is to investigate and evaluate if such a coordination of the national policies is necessary from a constitutional economics perspective. The thesis is that the planned actions against the tax avoidance strategies of multinational companies can strengthen the relation of the national corporation tax revenues to the use of public goods. However, the question arises if for interest and royalty payments an international coordinated withholding taxation would not be preferable and if the European Union additionally should not agree on a common assessment base for corporate taxation.


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