CEO of TGS AU Partners, Mikail Jaman: Indonesia must take advantages from current global situation to become leader in South East Asia.
TGS AU Partners, an independent member from TGS Global has received the opportunity to participate on the 6th International Fiscal Association (IFA) Indonesia – 2018 Annual International Tax Seminar with the theme entitled “Recent International Tax Developments and Its Implementation in Indonesia”, on Wednesday, December 5, 2018, at the CIMB Niaga Graha Financial Hall, Jakarta.
This annual seminar puts topics of various tax issues and changes in the international taxation landscape. More than 100 participants with a background in tax practitioners attended the seminar. The purpose of the annual seminar is to exchange ideas on regulatory issues in Indonesia in the context of changing the international taxation landscape.
The CEO of TGS AU Partners, Mikail Jaman, gave presentation for several domestic and global tax issues. Mikail explains about how Indonesia must take advantages of the current global situation to become ahead in the region. Indonesia should improve its tax and investment policy to attract more FDI and international business which focus on placing the vital value added creation activity in Indonesia. With the implementation of BEPS action plan, tax avoidance scheme is becoming more difficult than before, new corporate tax planning tends to place value creation activity on the jurisdiction which offer most competitive tax environment for business. Therefore, Indonesian government priority should be to attract business to move its vital value creation activity to Indonesia. Indonesia need to focus on increase of tax base rather than only focus on chasing leak tax revenue due to transfer pricing, etc. This new tax base will contribute to increase of tax revenue and at same time, place innovation activity in Indonesia and in long term it will stimulate a sustainable economic growth. The new FDI package should also provide incentives for both fiscal and non fiscal.
As the keynote speaker, Director of International Taxation at the Indonesian Directorate General of Taxes, John Hutagaol conveyed four variables that led to changes to the international tax landscape. Those are globalisation, underground economy, global economic growth, and the development of information and communication technology that is very progressive. The Directorate General of Taxes Taxation requires a policy change in order to ensure tax policy in Indonesia is in line with the changes the changes of the international taxation landscape.
In this seminar, the head of the Section of International Tax Dispute Prevention and Settlement Sub directorate, Directorate of International Taxation, Edi Sihar Tambunan explained transfer pricing regulation in Indonesia and the implementation of Arm’s Length Principle (ALP). Furthermore, Professor of Tax Law at the Melbourne University and Chairperson of IFA Asia Pacific, Professor Miranda discussed the issues of the digital economy. According to her, based on the data of GSMA Digital Mobile Report (2018), Indonesia will soon become the third largest smartphone market globally.
Analyst of Directorate of International Taxation Agreement and Cooperation, Directorate General of Taxes, Ramzil Huda present about the challenges of the digital economy in the context of income tax (Pajak Penghasilan/PPh) and Value Added Tax (VAT). He also presented SE-62/PJ/2013 that there is no difference in tax treatment between e-commerce transactions and the transaction of physical buying and selling.
One of the most interesting presentation was delivered by Senior Principal Tax Knowledge Management of International Bureau of Fiscal Development, Prof. Jan de Goede. Professor Goede presented the latest changes to the UN Model and OECD Model in the Double Tax Avoidance Agreement (P3B). He explained about some disadvantages in the use of two models that had been adopted by many countries in compiling and interpreting P3B. One of the weaknesses is related to inefficiency because there are many updates in the OECD Model and the UN Model.
The seminar also features other panelists and speakers from KPMG, Deloitte, PwC, RSM. One of the session is panel discussion put forward the issue regarding the development of international taxation and the implications given against Indonesia. The panel discuss about concept of beneficial owner, BEPS project, multilateral instrument, the development of the OECD VS UN Model Commentary, and so on. Indonesia throughout the last decade is one of some jurisdictions which are early to adopt tax global practice agreement, which not always create positive impact to business, where Indonesia is a developing countries not developed countries as other OECD members.
With this seminar, IFA is expected to be a place for tax practitioners to always improve the quality and contribution, especially for the Indonesian economy.