Analysis of Controlled Foreign Company (CFC) Rules In Indonesia To Prevent Tax Avoidance Practises

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.

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Taxation of Controlled Foreign Companies in Context of the OECD/G20 Project on Base Erosion and Profit Shifting as well as the EU Proposal for the Anti-Tax Avoidance Directive – An Interim Nordic Assessment

Nordic Tax Journal ◽

10.1515/ntaxj-2016-0005 ◽

2016 ◽

Vol 2016 (2) ◽

pp. 87-112 ◽

Cited By ~ 2

Author(s):

Peter Koerver Schmidt

Keyword(s):

European Commission ◽

Tax Avoidance ◽

Nordic Countries ◽

Foreign Company ◽

Profit Shifting ◽

Current Form ◽

Eu Member States ◽

Foreign Companies ◽

Cfc Rules ◽

The Eu

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.

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Influence of Anti-Tax Avoidance Rules on Profit Shifting and Real FDI - Examining CFC Rules

SSRN Electronic Journal ◽

10.2139/ssrn.2893907 ◽

2016 ◽

Author(s):

Axel Maximilian Prettl

Keyword(s):

Tax Avoidance ◽

Profit Shifting ◽

Cfc Rules

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CFC rules in the context of the proposed CCCTB directive

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis ◽

10.11118/actaun201159070363 ◽

2011 ◽

Vol 59 (7) ◽

pp. 363-370

Author(s):

Veronika Sobotková

Keyword(s):

Tax Avoidance ◽

The European Union ◽

Corporate Tax ◽

Tax Base ◽

Tax Preference ◽

Cross Border ◽

Council Directive ◽

Pros And Cons ◽

Low Costs ◽

Cfc Rules

In the proposal for a Council Directive on a Common Consolidated Corporate Tax Base (CCCTB) there have been introduced a specific anti-abuse provisions, CFC rules. These rules are aimed at tax evasions and tax avoidance. The basic principle is the protection of the tax base against erosion through practices of artificial income shifting. Generally, CFC rules prevent tax avoidance in a state of a shareholder by denying the deferred taxation of profits generated by its controlled company, which is a resident in a tax preference jurisdiction. Even thought the CCCTB directive would be aided easier and low-costs cross-border business as well as it would be restricted the harmful tax competition there are questions whether it is advisable to introduce these rules into such system of the CCCTB, whether these rules are compatible with the CCCTB and whether it is regulated properly. So, the focus of this paper rests on the interaction of the proposed CCCTB directive with existing CFC rules in the European Union. The paper deals with pros and cons, economic and legal perspectives these rules in the context of the proposed CCCTB directive.

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As Regras Brasileiras de Tributação de Controladas e Coligadas no Exterior: verdadeiras Controlled Foreign Company (CFC) Rules?

Revista de Direito Internacional ◽

10.5102/rdi.v14i2.4588 ◽

2017 ◽

Vol 14 (2) ◽

Author(s):

Melina De Souza Rocha Lukic ◽

Amanda Almeida Muniz

Keyword(s):

Foreign Company ◽

Para Determinar ◽

Cfc Rules

Este artigo pretende analisar se as regras criadas até então no Brasil para tributação de controladas e coligadas no exterior seguem o modelo das Controlled Foreign Company (CFC) Rules adotado em outros países. A metodologia utilizada foi a análise da legislação nacional e internacional bem como pesquisa bibliográfica e análise comparativa. Após o exame da estrutura das regras CFC criadas em outros países, definimos o modelo internacional e comparamos as normas brasileiras a este modelo. As regras do país não adotam os critérios que utilizam a maioria das CFC rules – localização da investida e natureza das rendas – para determinar a possibilidade de tributação, mas somente para diferenciar a forma pela qual se dá a tributação. Desta forma, pode-se concluir que o Brasil não adota uma regra nos parâmetros das CFC Rules estrangeiras.

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As Regras Brasileiras de Tributação de Controladas e Coligadas no Exterior: verdadeiras Controlled Foreign Company (CFC) Rules?

Revista de Direito Internacional ◽

10.5102/rdi/bjil.v14i2.4588 ◽

2017 ◽

Vol 14 (2) ◽

Author(s):

Melina De Souza Rocha Lukic ◽

Amanda Almeida Muniz

Keyword(s):

Foreign Company ◽

Para Determinar ◽

Cfc Rules

Este artigo pretende analisar se as regras criadas até então no Brasil para tributação de controladas e coligadas no exterior seguem o modelo das Controlled Foreign Company (CFC) Rules adotado em outros países. A metodologia utilizada foi a análise da legislação nacional e internacional bem como pesquisa bibliográfica e análise comparativa. Após o exame da estrutura das regras CFC criadas em outros países, definimos o modelo internacional e comparamos as normas brasileiras a este modelo. As regras do país não adotam os critérios que utilizam a maioria das CFC rules – localização da investida e natureza das rendas – para determinar a possibilidade de tributação, mas somente para diferenciar a forma pela qual se dá a tributação. Desta forma, pode-se concluir que o Brasil não adota uma regra nos parâmetros das CFC Rules estrangeiras.

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Pengaruh Konvergensi International Financial Reporting Standards (Ifrs) Terhadap Penghindaran Pajak(Tax Avoidance)

Kajian Bisnis STIE Widya Wiwaha ◽

10.32477/jkb.v26i2.276 ◽

2018 ◽

Vol 26 (2) ◽

pp. 158-169

Author(s):

Umi Wahidah ◽

Sri Ayem

Keyword(s):

Financial Reporting ◽

Tax Evasion ◽

Stock Exchange ◽

Control Variable ◽

Tax Avoidance ◽

Sampling Technique ◽

International Financial Reporting Standards ◽

Reporting Standards ◽

Control Variables ◽

Financial Reporting Standards

This research aimed to examine the effect of the convergence of International Financial Reporting Standards (IFRS) on tax avoidance on companies listed in Indonesia Stock Exchange. Tax avoidance that used in this research was Cash Efective Tax Rate (CETR). This research is also use the control variable to get other different influence that different such as CSR, size, and earning management (EM. This research used populations sector of transport service companies that listed in Indonesia Stock Exchange. The data of this research taken from secondary data that was from the Indonesia Stock Exchange in the form of Indonesian Capital Market Directory (ICMD) and the annual report of the company 2011-2015. The method of collecting sample was purposive sampling technique, the population that to be sampling in this research was populations that has the criteria of a particular sample. Companies that has the criteria of the research sample as many as 78 companies. The method of analysis used in this research is multiple regression analysis. Based on regression testing shows that the convergence of International Financial Reporting Standards (IFRS) has a positiveand significant impact on tax evasion. This shows that IFRS convergence actually improves tax evasion practices. The control variables of firm size and earnings management also significantly influence the application of IFRS in improving tax avoidance practices, while CSR control variables have no role in convergence IFRS in improving tax evasion practice.

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THE IMPACT OF UKRAINE'S EXCISE DUTY POLICY ON THE TRANSFORMATION PROCESSES OF THE TOBACCO MARKET

Economy of Ukraine ◽

10.15407/economyukr.2020.10.019 ◽

2020 ◽

Vol 2020 (10) ◽

pp. 19-33

Author(s):

Nadiia NOVYTSKA ◽

◽

Inna KHLIEBNIKOVA ◽

Keyword(s):

Structural Changes ◽

Tax Avoidance ◽

Transformation Process ◽

State Regulation ◽

Tobacco Products ◽

Excise Duty ◽

Increasing Demand ◽

High Level ◽

The Impact ◽

Transformation Processes

The market of tobacco products in Ukraine is one of the most dynamic and competitive. It develops under the influence of certain factors that cause structural changes, therefore, the aim of the article is to conduct a comprehensive analysis of transformation processes in the market of tobacco and their alternatives in Ukraine and identify the factors that cause them. The high level of tax burden and the proliferation of alternative products with a potentially lower risk to human health, including heating tobacco products and e-cigarettes, are key factors in the market’s transformation process. Their presence leads to an increase in illicit turnover of tobacco products, which accounts for 6.37% of the market, and the gradual replacement of cigarettes with alternative products, which account for 12.95%. The presence on the market of products that are not taxed or taxed at lower rates is one of the reasons for the reduction of excise duty revenues. According to the results of 2019, the planned indicators of revenues were not met by 23.5%. Other reasons for non-fulfillment of excise duty revenues include: declining dynamics of the tobacco products market; reduction in the number of smokers; reorientation of «cheap whites» cigarette flows from Ukraine to neighboring countries; tax avoidance. Prospects for further research are identified, namely the need to develop measures for state regulation and optimization of excise duty taxation of tobacco products and their alternatives, taking into account the risks to public health and increasing demand of illegal products.

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