Should CbCR Go Public? A Developing Country’s Perspective of Public CbCR
DOI:
https://doi.org/10.31092/jpi.v6i2S.1824Keywords:
country-by-country reporting, tax transparency, public CbCRAbstract
Profit shifting is more significant for developing countries since their tax revenue relies heavily on corporate income tax. The introduction of CbCR of the OECD/G20 BEPS Project is perceived to enhance transparency for tax administration, expected to help developing countries overcome this problem. However, using CbCR and its information is subject to various conditions and constraints. Calling for the implementation of public CbCR has been persistent further by non-government organizations (NGOs). Public disclosure is hoped to increase transparency and keep aggressive tax planning behind. Several initiatives have applied public disclosure of CbCR. This paper aims to review the current regime of CbCR in Indonesia. It then studies the existing implementation of public CbCR in the European Union as examples of public CbCR in practice. Further, this study discusses the potential benefits, challenges, and risks of public disclosure of the CbCR from the perspectives of developing countries.
References
Arifin, N. Z. (2014). BEPS dalam Kerangka Kerja Sama G20 dan Implementasinya kepada Indonesia (BEPS in the G20 Framework and its Application to Indonesia). Retrieved from Fiscal Policy Agency website: https://fiskal.kemenkeu.go.id/kajian/2014/12/23/140022144159810-beps-dalam-kerangka-kerja-sama-g20-dan-implementasinya-kepada-indonesia.
Arnold, B. J. (2019). International Tax Primer (4th ed.). Netherlands: Wolters Kluwer Law International B.V.
Astuti, M. D. (2017). New Transfer Pricing Documentation Rules: Implementation of BEPS Action 13 Recommendations. Asia-Pacific Tax Bulletin IBFD, Vol. 23 No. 3.
Chand, V. & Picariello, S. (2021, June 1). The Revamping of Public CbCR in Europe: much ado about nothing?. Retrieved from Kluwer International Tax Blog website: http://kluwertaxblog.com/2021/06/01/the-revamping-of-public-cbcr-in-europe-much-ado-about-nothing/.
Cokfield, A. J. & MacArthur C. D. (2015). Country-by-Country Reporting and Commercial Confidentiality. Canadian Tax Journal, 63:3.
Crivelli, E. Mooij, R. D. & Keen, M. (2015). Base Erosion, Profit Shifting and Developing Countries. IMF Working Paper, WP/15/118.
Director General of Taxes Regulation No. PER-39 of 2017.
Director General of Taxes Circular Letter No. SE-38 of 2019.
Directorate General of Taxes Annual Report 2020.
Directorate General of Taxes. (2021, November 1). List Of Countries That Have QCAA for Exchange of CbCR With Indonesia. Retrieved from DGT website: https://www.pajak.go.id/sites/default/files/2021-11/20211101%20Negara%20yang%20memiliki%20daftar%20pertukaran%20QCAA%20dengan%20Indonesia.pdf.
Dutt, V. K., Nicolay, K. & Spengel, C. (2021). Reporting Behavior and Transparency in European Banks’ Country-by-Country Reports. ZEW Discussion Paper, No. 21-019.
Eurodad presentation on the Public CbCR Consultation Meeting. (2020). Retrieved from the OECD website: www.oecd.org/tax/beps/presentation-2020-review-of-country-by-country-reporting-public-consultation-meeting-may-2020.pdf.
European Commission. (2018). Review of Country-By-Country Reporting Requirements for Extractive and Logging Industries: Final Report. Retrieved from the European Commission website: <https://ec.europa.eu/info/sites/default/files/business_economy_euro/company_reporting_and_auditing/documents/181126-country-by-country-reporting-extractive-logging-industries-study_en.pdf.
European Union. Public Country-by-Country Reporting. Retrieved from the European Commission website: https://ec.europa.eu/info/business-economy-euro/company-reporting-and-auditing/company-reporting/public-country-country-reporting_en#requirements-for-extractive-and-logging-industries.
Evers, M. T., Meier, I. & Spengel, C. (2014). Transparency In Financial Reporting: Is Country-by-Country Reporting Suitable to Combat International Profit Shifting?. ZEW Discussion Paper, No. 14-015.
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2394035.
Falcão, T. & Yaffar, A. L. (2020). Exchange of Information: Issues, Use, and Collaboration. Cashier de droit Fiscal International, Vol. 105B.
Financial Transparency. (2016). Why Public Country-by-Country Reporting for Large Multinationals is A Must. Retrieved from the Fiscal Transparency website: http://financialtransparency.org/wp-content/uploads/2016/02/Joint_Civil_Society_QA_pCBCR.pdf.
__ __. (2020). Joint response to OECD public consultation document on the review of Country-by-Country Reporting (BEPS Action 13). Retrieved from the Fiscal Transparency website:
General Tax Provisions and Procedures Law No. 28 of 2007 (Undang–Undang Ketentuan Umum dan Tata Cara Perpajakan/KUP Law).
Haines, A. (2020, March 12). Public CbCR Debate Taken to the OECD. International Tax Review. Retrieved from the International Tax Review website: www.internationaltaxreview.com/article/2a6a59lajj2mk5h2wmvb4/public-cbcr-debate-taken-to-the-oecd.
Hanlon, M. (2018). Country-by-Country Reporting and the International Allocation of Taxing Rights. International Bureau of Fiscal Documentation (IBFD) Bulletin for International Taxation, April/May 2018.
Hasegawa, M. et al. (2012). The Effect of Public Diclosure on Reported Taxable Income: Evidence from Individuals and Corporations in Japan. Retrieved from the SSRN website: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1653948.
Joshi, P. (2020). Does Private Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from BEPS Action Item 13. Journal of Accounting Research Volume 58 Issue 2.
__ __, Outslay, E. & Persson, A. (2020). Does Public Country-by-Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry. Contemporary Accounting Research Volume 37, Issue 4 p. 2357-2397.
KPMG. (2021, August 12). EU Public CbCR: They thought it wouldn’t happen... until it did. Retrieved from the KPMG website:
Kurniawan, N. & Saputra, A. D. (2020). Does the Recently Implemented Regulation on Country-by-Country Reporting Tax Avoidance?. Jurnal Akuntasi dan Keuangan Indonesia, Vol. 17 No. 1.
Lagarden, M. et al. (2020). Country-by-Country Reporting Goes Public-Cui Bono?. International Transfer Pricing Journal, 27(2).
Loureiro, M. C. (2022). Article: The Shortcomings of the EU Public Country-by-Country Reporting Directive. EC Tax Review, Vol. 31 Issue 3 Kluwer Law International BV.
Matheson. (2021, December 9). EU Directive on Public Country-by-Country Reporting. Retrieved from Lexologi website:
https://www.lexology.com/library/detail.aspx?g=c539ec96-c632-4e7e-98a8-5f8dc529de2c.
Mbatha, G. F. (2021). A Critical Analysis of Public Disclosure of OECD Country-by-Country Reporting. [Unpublished Master dissertation] North-West University.
Minister of Finance Regulation No. PMK-213 of 2016
Mulyani, Y. (2017). New Transfer Pricing Documentation Requirements and Country-by-Country Reporting. IBFD International Transfer Pricing Journa,l May/June.
Murphy, R. (2009). Country by Country Reporting: Holding Multinational Corporations to Account wherever they are. Financial Integrity and Economic Development Task Force, Washington DC.
__ __ , Jansky, P. & Shah, A. (2019). BEPS Policy Failure—The Case of EU Country-By-Country Reporting. Nordic Tax Journal 1 63-86. Retrieved from website: https://sciendo.com/pdf/10.1515/ntaxj-2019-0005.
Müller, R., Schoenrock, M. & Spengel, C. (2022). International - How to Move Forward with Country-by-Country Reporting? A Qualitative Content Analysis of the Stakeholders. Comments in the OECD 2020 Review. World Tax Journal, Vol. 14 No. 2.
Netjes, W. & Freyer, D. (2022). Tax Transparency Is Here to Stay: An Analysis of the Public CbCR Directive. Intertax, Volume 50, Issue 8 & 9 Kluwer Law International BV.
OECD. (2015). Transfer Pricing Documentation and Country-by-Country Reporting, Action 13-2015 Final Reports. OECD Publishing Paris.
__ __. (2016). BEPS Project Explanatory Statement: 2015, OECD/G20 Base Erosion and Profit Shifting Project. OECD Publishing Paris
__ __. (2018). Country-by-Country Reporting–Compilation of Peer Review Reports (Phase 1): Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project. OECD Publishing Paris.
__ __. (2019). Country-by-Country Reporting–Compilation of Peer Review Reports (Phase 2): Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project. OECD Publishing Paris.
__ __. (2020). Country-by-Country Reporting – Compilation of Peer Review Reports (Phase 3): Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project. OECD Publishing Paris.
__ __. (2021). Country-by-Country Reporting–Compilation of 2021 Peer Review Reports: Inclusive Framework on BEPS: Action 13, OECD/G20 Base Erosion and Profit Shifting Project. OECD Publishing Paris.
__ __. (2022, January 31). Signatories of the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA) and Signing Dates. Retrieved from the OECD website: https://www.oecd.org/tax/beps/CbC-MCAA-Signatories.pdf.
__ __. (2022). Revenue Statistics in Asia and the Pacific 2022 – Indonesia. Retrieved from the OECD website: https://www.oecd.org/tax/tax-policy/revenue-statistics-asia-and-pacific-indonesia.pdf.
OECD/G20 Inclusive Framework on BEPS. Retrieved from the OECD website: https://www.oecd.org/tax/beps/
Oguttu, A. W. (2020). Africa/Developing Countries/OECD/UN/International-Curtailing BEPS through Enforcing Corporate Transparency: The Challenges of Implementing Country-by-Country Reporting in Developing Countries and the Case for Making Public Country-by-Country Reporting Mandatory. World Tax Journal, vol. 12 no. 1.
Overesch, M. & Wolff, H. (2021). Financial Transparency to the Rescue: Effects of Public Country-by-Country Reporting in the European Union Banking Sector on Tax Avoidance. Contemporary Accounting Research, Vol. 38 Issue 3 1619.
https://onlinelibrary.wiley.com/doi/full/10.1111/1911-3846.12669?saml_referrer.
Owens, J. (2015). Tax Transparency and BEPS. Journal of Tax Administration, Vol 1. No. 2.
Peters, C. (2015). Developing Countries Reactions to the G20/OECD Action Plan on Base Shifting. Bulletin for International Taxation IBFD, June/July.
Prasetyo, B. (2016, March 21). Menkeu: 2.000 Perusahaan Modal Asing Tidak Bayar Pajak’ (Minister of Finance: 2,000 foreign-capital companies do not pay taxes). Retrieved from Antara News website: www.antaranews.com/berita/551189/menkeu-2000-perusahaan-modal-asing-tidak-bayar-pajak.
Quddus, G. G. (2017, January 9). Membidik Ratusan Korporasi dari Transfer Pricing’ (Targeting Hundreds of Corporations from Transfer Pricing). Retrieved from the Kontan website:
https://nasional.kontan.co.id/news/membidik-ratusan-korporasi-dari-transfer-pricing.
Rosdina, H., Tambunan M. R. U. D. & Irianto, E. S. (2019). Country Note: Review of Implementation of the Inclusive Framework on Base Erosion and Profit Shifting in Indonesia. Intertax, Volume 47 Issue 6 & 7, Kluwer Law International BV.
Rosid, A. & Daholi, T. Q. H. (2018). Tax Design and Administration in a Post-BEPS Era: Key Reform Measures in Indonesia. Retrieved from the SSRN website: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3328604.
Sabljić, S., Mörec, B. & Vasić, V. (2021). The Effects Of Newly Introduced Country-By-Country Reporting On Aggressive Tax Avoidance: Evidence From European Banks. The Singaporean Economic Review Vol. 66 Number 3.
Saputra, M. D. (2017, February 20). Implikasi BEPS 13 terhadap Aturan TP Doc di Indonesia (BEPS 13 Implications for TP Doc Rules in Indonesia). Retrieved from the DDTC website: https://news.ddtc.co.id/analisis-transfer-pricing-implikasi-beps-13-terhadap-aturan-tp-doc-di-indonesia-9379.
Simone, L. D. & Olbert, M. (2021). Real Effects of Private Country-by-Country Disclosure. Accounting Review. Retrieved from the London Business School Research website: https://lbsresearch.london.edu/id/eprint/2195/1/SSRN-id3398116.pdf.
Spengel, C. (2018). Country-by-Country Reporting and the International Allocation of Taxing Rights: Comments to Michelle Hanlon. Bulletin for International Taxation, Vol. 72 No. 4/5 218–219.
Transparency International. (2021). Country Data: Indonesia. Retrieved from the Transparency International website: https://www.transparency.org/en/countries/indonesia.
Tully, P., O’Sullivan R. & Berry, Jd. (2021, December 9). EU Directive on Public Country-by-country Reporting. Retrieved from the Matheson website: https://www.matheson.com/insights/detail/eu-directive-on-public-country-by-country-reporting.
Wahyuni, A. T., Anggoro, A. W. & Sirait, D. (2019). Implementation of Country-By-Country Reporting to Tackle BEPS: Assessment of the Potential Benefits. Asia-Pasific Bulletin, Volume 25 No. 4.
Wöhrer, V. (2017). Ist öffentliches Country-by-Country-Reporting mit den EU-Grundrechten vereinbar? (Is public country-by-country reporting compatible with EU fundamental rights?). Retrieved from the Vienna University website:
www.wu.ac.at/fileadmin/wu/d/i/taxlaw/institute/staff/publications/Oeffentliches_CbCR_Grundrechte.pdf.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2022 Chabibah Nur Afida
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.
