ASEAN Countries To Anticipate Impact of Global Minimum Tax Implementation

Monday, 28 August 2023

ASEAN Countries To Anticipate Impact of Global Minimum Tax Implementation

JAKARTA. ASEAN countries consider that the impact of the implementation of the global minimum tax initiated by the G20 and OECD must be anticipated before it is actually implemented in 2024.

This was one of the issues discussed at the joint meeting of ASEAN Finance Ministers and Central Bank Governors (AFMG), on Friday (25/8).

In the joint statement, one of the impacts of the global minimum tax implementation that must be mitigated is the incentive policies carried out by ASEAN countries.

"The meeting acknowledged the discussion to improve the understanding of ASEAN members in the implementation of the global minimum tax," the joint statement stated.

Read: Is Indonesia Ready to Adopt the Two-Pillar of Global Tax Architecture?

The global minimum tax policy includes the obligation of countries in the world to impose an effective tax rate of at least 15% on multinational companies that meet the criteria.

If there is a country that imposes an effective tax rate below 15%, then the top-up tax provision will apply to the country of origin of an entity.

The provision is contained in Pillar 2 of the global tax consensus on digital transactions.

The provisions of Pillar 2 also require that all jurisdictions that set effective rates of income tax on interest, royalties, and other payments of less than 9%, are subject to tax regulations or the Subject to Tax Rule (STR).

Previously, the Minister of Investment or Head of the Investment Coordinating Board (BKPM) Bahlil Lahadalia assessed that implementing a minimum tax rate would only benefit developed countries or countries of origin of multinational companies.

Meanwhile, for developing countries like Indonesia, this policy will make it difficult to attract investment, which has always been promised low tax rates.

Therefore, if this policy applies to all countries it will be inappropriate because the conditions between developed and developing countries are not yet comparable or apple to apple. (ASP/KEN)


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