Adapting Indonesia’s Tax Incentive Strategy In The Post Pillar Two Era
DOI:
https://doi.org/10.61261/muctj.v1i2.47Keywords:
Tax Incentive, Pillar Two, R&D ActivitiesAbstract
Indonesia, as a developing country striving for economic growth and technological advancement, faces the imperative challenge of re-evaluating its tax incentive regime in light of the global tax landscape's recent transformation through BEPS Action 1 Pillar Two. Using qualitative research methodology, this study delves into the framework of Pillar Two and its implications for Indonesia's tax incentives policy. This paper highlights the pressing need for Indonesia to recalibrate its tax incentive strategy and proposes that Research and Development (R&D) tax incentives as a promising solution, specifically focusing on input R&D activities that are compliant with The Global Anti-Base Erosion (GloBE) rules. This study examines the potential of R&D tax incentives to stimulate innovation, attract foreign investments, and ultimately contribute to long-term economic growth. As Indonesia charts its path toward economic prosperity, rethinking its tax incentive policy is paramount.
References
Akcali, B.Y., & E. Sismanoglu. (2015). Innovation and The Effect of Research and Development (R&D) Expenditure on Growth in Some Developing and Developed Countries. 195 Procedia – Social and Behavioral Sciences.
Appelt, S. et al. (2016). R&D Tax Incentives: Evidence on design, incidence and impacts. OECD Science Technology and Industry Working Papers.
Arginelli, Paolo. (2015). Innovation through R&D Tax Incentives: Some Ideas for a Fair and Transparent Tax Policy. World Tax Journal.
Baghana, R, & P. Mohnen. (2009). Effectiveness of R&D Tax Incentives in Small and Large Enterprises: Analysis of Enterprise Data in Québec. 33 Small Business Economics.
Easson, Alex. (2001). Tax Incentives for Foreign Direct Investment Part II: Design Considerations. Bulletin IBFD.
European Union. (2014). A Study On R&D Tax Incentives Final Report. Working Paper N. 52
International Senior Lawyers Project (ISLP). (2022). A Guide for Developing Countries on How to Understand and Adapt to the Global Minimum Tax. International Institute for Sustainable Development and International Senior Lawyers Project.
Labeaga, J.M. et al. (2020). Does Persistence In Using R&D Tax Credits Help To Achieve Product Innovations? Working Papers Department of Applied Economics II of Universidad de Valencia.
Laukkanen, A. (2018). Chapter 5: Special Economic Zones: The Acceptance of Tax Incentives in the BEPS World in Tax Incentives in the BEPS Era. Books IBFD.
Lillo, F. De., (2020). Chapter 1: Introducing Pillar Two: Towards a Global Minimum Effective Tax Rate in Global Minimum Taxation?: An Analysis of the Global Anti-Base Erosion Initiative. Books IBFD.
McLure, Jr, Charles E. (1999). Tax Holidays and Investment Incentives A Comparative Analysis. Bulletin IBFD.
Muyaa, Emily. (2018). Chapter 2: Tax Holidays in Tax Incentives in the BEPS Era. Books IBFD.
Parson, M, & N. Phillips. (2007). An Evaluation of the Federal Tax Credit for Scientific Research and Experimental Development. Canada Department of Finance Working Paper.
Obuoforibo, B. et al. (2020). Global Minimum Taxation?: An Analysis of the Global Anti-Base Erosion Initiative. Books IBFD.
Organisation for Economic Co-operation and Development (OECD). (2020). Tax Challenges Arising from Digitalisation – Report on Pillar Two Blueprint: Inclusive Framework on BEPS. OECD Publishing.
OECD/G20. (2015). Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance – Action 5: 2015 Final Report. IBFD.
OECD/G20 Base Erosion and Profit Shifting Project. (2021). Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy. OECD Publishing.
Spengel, Christoph, Barbara Stage, & Daniela Steinbrenner. (2022). R&D Tax Incentive Regimes – A Comparison and Evaluation of Current Country Practices. World Tax Journal.
The Global Economy. (2023). Retrieved May 12, 2023, from https://www.theglobaleconomy.com/Indonesia/Research_and_development/
The Global Economy. (2023). Retrieved May 12, 2023, from https://www.theglobaleconomy.com/rankings/research_and_development/#:~:text=Research%20and%20development%20expenditure%2C%20percent,67%20countries%20was%201.3%20percent.
United Nations Conference on Trade and Development (UNCTAD). (2000). Tax Incentives and Foreign Direct Investment: A Global Survey. UNCTAD.
World Bank. (2021). The Global Minimum Tax: from agreement to implementation.” Overview booklet. Information and Communications for Development. World Bank.
