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Jakarta Post

Preventing MNCs from shifting profits

  • Fadhil Hasan and Imaduddin Abdullah

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PREMIUM
Jakarta   /   Wed, June 14, 2017   /  10:24 am
Preventing MNCs from shifting profits An aerial view of Jakarta city center. (Shutterstock/File)

Over the past several years, the Indonesian government has initiated a number of policies intended to expand its tax base. An expanded tax base would create a higher fiscal space that could be used to fund development programs, especially for infrastructure development. In the National Medium Term Development Plan 2015-2019, the government set an ambitious revenue state target of which tax income is expected to contribute to 86.1 percent. In addition, the tax ratio (tax receipts against gross domestic product) is also projected to increase to 15.6 percent. In order to meet these targets, the government should introduce more policies beyond tax amnesties. One of the policies that should be on the table is one designed to prevent profit shifting conducted by multinational companies (MNCs). The presence of MNCs brings positive impacts for host economies through job creation, value ...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.