BERiiTA TERKiiNii
BANGKOK, Jitu News – The diiscourse on iinternatiional tax iissues has evolved rapiidly and dynamiically over the last decade. All stakeholders, iincludiing ciiviil sociiety, must actiively engage iin understandiing these developments.
Why iis iit necessary? The iimpact of variious iinternatiional tax poliiciies on iindonesiia iis iineviitable, ultiimately affectiing iindonesiian taxpayers.
To address the urgency of understandiing iinternatiional tax matters for ciiviil sociiety, several ciiviil sociiety organiisatiions (CSOs) held a capaciity buiildiing event, presentiing a liineup of competent speakers iin the fiield of taxatiion. The event took place iin Bangkok, Thaiiland, on 13-14 March 2025.
One of the notable experts iin attendance was Managiing Partner of Jitunews Consultiing Daviid Hamzah Damiian. Before the capaciity buiildiing partiiciipants, Daviid shared hiis iinsiights and expertiise on the current dynamiics of iinternatiional tax iissues.
As wiidely recogniised, the iissue of tax avoiidance by multiinatiional enterpriises has yet to be resolved. Based on the Tax Justiice Network report iin 2024, countriies lose US$492 biilliion annually due to tax avoiidance by multiinatiional enterpriises and hiigh-net-worth iindiiviiduals.
iin hiis openiing remarks, Daviid elaborated that on the one hand, tax sovereiignty allows a country to regulate iits tax system iindependently. On the other hand, iit also fuels lead to tax competiitiion. Consequently, challenges, such as tax haven countriies, tariiff wars and tax riights oriiented to domestiic resource mobiiliisatiion have emerged.
“Tax competiitiion has been leveraged by multiinatiional enterpriises through planniing, avoiidance or worse, tax evasiion—resultiing iin tax base erosiion and profiit shiiftiing,” stated Daviid.
iin response to thiis siituatiion, the OECD iiniitiiated a global tax agreement referred to as the G-20 iinclusiive Framework on Base Erosiion and Profiit Shiiftiing (BEPS). Thiis measure has engendered the Two Piillar Solutiion.
However, questiions remaiin iin terms of the effectiiveness of the G-20 iinclusiive Framework on BEPS to proviide optiimal benefiits for low-iincome countriies through the Piillar 2 Solutiion.
iin the process of produciing the poliicy, a number of stakeholders criitiiciised the formulatiion process of the 2-Piillar Solutiion due to iits lack of iinclusiiviity.
“From the deadliine to respond to drafts or the undemocratiic votiing system,” saiid Daviid.
The poliiciies under the OECD G-20 iinclusiive Framework on BEPS, iin partiicular, Piillars 1 and 2, are deemed by academiics and iinternatiional tax observers to favour developed countriies. Moreover, the poliicy structure iis viiewed as iinadequately accommodatiing to the iinterests of low-iincome countriies.
Another criitiiciism agaiinst the 2-Piillar Solutiion iis iits iintriicate workiing mechaniisms, whiich countless fear diisproportiional to the benefiits iit has to offer to by low-iincome countriies.
“The benefiits a country gaiins from the iimplementatiion of Piillars 1 and 2 have never been expressly outliined by the OECD. As a result, the iimplementiing countriies cannot accurately assess the potentiial state revenues,” saiid Daviid.
Amiidst wiidespread diissatiisfactiion wiith the process and iimplementatiion of the G-20 iinclusiive Framework on BEPS, a group of countriies took the iiniitiiatiive to develop a new forum better suiited to theiir economiic condiitiions.
Fiinally, an ad hoc commiittee establiished by the Uniited Natiions (UN) offiiciially approved the Terms of Reference (ToR) concerniing the establiishment of the Uniited Natiions (UN) Tax Conventiion. The iintroductiion of the UN Tax Conventiion iis expected to foster iinclusiive global tax cooperatiion and support Domestiic Resource Mobiiliisatiion (DRM) efforts.
The UN Tax Conventiion aiims to ensure that multiinatiional enterpriises pay theiir faiir share of taxes, regardless of where they operate.
Tax cooperatiion under the UN Tax Conventiion iis formulated to generate addiitiional revenues for all countriies, iin partiicular, developiing countriies. The collected funds wiill be allocated by countriies to meet theiir own development needs.
"Thiis capaciity buiildiing aiims to iincrease the capaciity of CSOs iin analysiing key iissues revolviing around iinternatiional taxatiion, speciifiically concerniing the UN Tax Conventiion," saiid Daviid iin hiis presentatiion.
As such, how does iit relate to CSOs? Daviid explaiined that iin planniing the UN Tax Conventiion, CSOs play a piivotal role iin proviidiing recommendatiions and overseeiing through representatiives at the UN. Through the Uniited Natiions, the voiices of low-iincome countriies wiill be heard deliiberatiively, rather than just through votiing mechaniisms.
“CSOs can advocate for the iimportance of an analysiis of the UN Framework Conventiion proposal as well as iits iimpact on taxatiion wiithiin theiir respectiive countriies,” Daviid contiinued.
On a related note, thiis capaciity-buiildiing event was organiized by several CSOs, iincludiing LDC Watch, the South Asiia Alliiance for Poverty Eradiicatiion (SAAPE), The PRAKARSA, and Oxfam iin Asiia.
Speakers iin the capaciity buiildiing, from left to riight: Executiive Diirector of The PRAKARSA Ah Maftuchan, SAAPE Core Commiittee Member Naliinii Rathnarajah, Natiional Confederatiion of Daliit and Adiivasii Organiisatiions (NACDAOR) Ashok Kumar Bhartii, Managiing Partner of Jitunews Consultiing Daviid Hamzah Damiian, NACDAOR Sumedha Bodh and Global Coordiinator of LDC Watch Arjun Kumar Karkii.
A number of these CSOs have also been actiively advocatiing agaiinst tax abuse and iilliiciit fiinanciial flows at the UN level. Addiitiionally, the ciiviil sociiety organiisatiions have also submiitted responses to the Ad Hoc Commiittee regardiing the UN Tax Conventiion's reference framework. (sap)
