Minister of Finance (Menkeu) Sri Mulyani Indrawati expressed her appreciation for the historic agreement on changing the international tax architecture to become more stable and fair. This agreement is in line with the tax reform agenda that is being rolled out by the Government of Indonesia to increase tax revenues with a fair, healthy, effective and accountable tax system.
There are two pillars that resulted from the agreement. The first pillar is to reallocate some tax rights to give market jurisdictions the right to tax a share of the profits of large multinational corporations. The second pillar concerns the imposition of a global minimum corporate tax rate of 15% to overcome tax competition.
"The key components of the two pillars concerning the reallocation of profits of multinational companies as well as an effective global minimum tax are very important to update the existing international tax system to achieve a just and inclusive, simple and fair globalization for developed and developing countries," said the Minister of Finance online. in the G20 Finance Ministers and Central Bank Governors (FMCBG) Meeting, Saturday (10/07).
The Minister of Finance explained that the agreement is not the final goal, but is a strong starting point to formulate a way forward to ensure smooth implementation.
"We are committed to working with the OECD, the G20 Inclusive Framework at BEPS to immediately address the remaining issues and finalize the design elements within the framework agreed upon in October 2021. The G20 Indonesia Presidency in 2022 is committed to maintaining momentum in the implementation of the agreement," he said.
This agreement reflects the success of multilateralism in overcoming global challenges, in particular combating the practice of Base Erosion and Profit Shifting (BEPS) and “race to the bottom” in international taxation.
“This is a historic moment. I would like to express our appreciation to the Italian G20 Presidency and the OECD for their leadership in reaching this historic agreement on a more stable and fairer international tax architecture,” explained the Minister of Finance.
The Minister of Finance also appreciated the relevant and timely initiatives of the Italian G20 Presidency at the G20 High-Level Tax Symposium on Tax Policy and Climate Change.
“It is also an excellent forum as a base to gather information, knowledge, and also to better frame ongoing discussions on climate mitigation policies,” he said.
On the occasion, the Minister of Finance highlighted three main issues that are expected to increase dialogue on climate in the G20 financial path. First, it is important to encourage private sector participation in addressing climate challenges by strengthening and expanding the reach of financing platforms.
“A multidimensional approach, including the design of tax incentives, is critical to facilitating and channeling a much larger share of private finance and investment toward more sustainable and low-carbon options,” he stressed.
Second, climate finance guidelines and frameworks, such as carbon pricing, incentive mechanisms, and innovative financing, are needed to provide alternative options for accelerating climate action.
"Third, a comprehensive assessment of the economic impact of climate change, including recognizing the broad implications of climate-related policies, is important to ensure a balanced discussion at the G20," concluded the Minister of Finance.
Source : https://www.kemenkeu.go.id/publikasi/berita/menkeu-apresiasi-kesepakatan-perpajakan-internasional/
