Indonesia as Middle Power on Taxation to Pursue Developing Nation Perspective in BEPS Inclusive Framework Through G20 (Ranking Approach)

In 2022, Indonesia had a special occasion as the Presidency of G20 held in Bali while still in the middle of recovery after COVID-19 Pandemic and instability of global geopolitics. The group of world largest nations by Gross Domestic Products (GDP) and consisting of interesting countries of both developed and developing nations by its GDP Per capita. It almost balanced between both developed and developing with developed nations such as but not limited to United States, United Kingdom, France, etc., and there are also developing nations such as BRICS (Brazil, Russia, India, China and South Africa), Turkey, Mexico, not to mention Indonesia as the President of G20 in 2022. These developing nations due to their large share of world’s GDP are rather classified as middle power or even revisionist power, referring to BRICS, and not classified as a truly developing nation that mostly does not really have a voice in the international economy, compared with these “developing” nations. Therefore, these middle powers including Indonesia as the 2022 president are using the platform of G20 to become the channel or bridge and emphasize to pursue for the sake of those developing nations outside of the group.

Indonesia as a middle power seems to try to be a bridge for developing and underappreciated nations to be considered for their aspirations in international tax agenda and standard that G20 collaborated with OECD in BEPS inclusive framework. To support this argument, Indonesia firstly has to be classified as a middle power to have credibility to speak on behalf of developing nations in terms of taxation. There are basically two approaches to identify a nation to be a middle power, quantitative (ranking) and qualitative (behavior) approach. Based on a quantitative approach, according to J Ping, middle power ranks middle in terms of (1) population, (2) geographic area (3) Gross Domestic Product (GDP), (4) real GDP growth, (5) export value, (6) National Income per capita, (7) the percentage of trade in GDP, (8) life expectancy and (9) military spending. According to Andrew Carr, middle power is expected to be in the top 20 on existing indicators with a maximum rating of up to the 90s or the median of a total of 198 countries listed by the United Nations.

Although this article focuses on taxation, the scope of rankings shown are only related to international taxation such as tax revenue, tax ratio, number of tax treaties and tax treaty compliance. Also due to limited data, this article would only be focusing on G20 nations as a sample because of its heterogeneity and represent more than half of the world economy. This article would also be referring to the world average to be compared as if Indonesia is that Indonesia closed to average. That means Indonesia is still developing in terms of taxation or not. The ranking approach has the ability to measure the power of the state and make it comparable to other countries in the hierarchy even though it makes the state an inanimate object because it does not describe the behavior of the middle power which has various strategic “personalities” in shaping the interests of the state and its foreign policy.

Indonesia ranking in GDP and tax revenue amongst G20

In G20 as mentioned before, comprised from developed nations such as United States of America with highest GDP Per Capita amongst G20 reached 74.436 USD and also highest GDP Nominal to developing nations categorized as lower middle income, according to world bank, such as India with the lowest GDP amongst G20 reaching 2.445 USD. Indonesia itself has stepping up into upper middle-income nation for reaching 4.467 USD per capita or overreach the bottom line of lower middle income of 4.046 USD per capita stated by World Bank although still counted as second from the last. Meanwhile according to the 2022 IMF estimation , the average of world GDP Per Capita is 13.400 USD per capita and Indonesia is on rank 114 or not too far from the median of 90s, moreover proving that Indonesia is really developing nation that almost in the middle of world rankings.

G20 Tax Ratio to GDP Ranking

No Country Tax Ratio  


Country Tax Ratio  


Country Tax Ratio
1 France 40,31% 2 Italy 38,30% 3 European Union 37,78%
4 Germany 36,40% 5 Australia 32,24% 6 United Kingdom 26,99%
7 Russia 26,63% 8 United States 19,57% 9 Japan 19,31%
10 South Korea 18,09% 11 Canada 16,50% 12 Argentina 15,71%
13 Brazil 14,10% 14 Turkey 13,75% 15 Mexico 13,71%
16 China 13,40% 17 Saudi Arabia 10,79% 18 Indonesia 10,39%
19 India 9,42% 20 South Africa 8,05%
G20 Average 22,85%   World Bank Minimum Tax Ratio Recommendation 15%


Although, by total Indonesia and other G20 GDP’s share in the world economy is up to 75% and Indonesia is number 16 in the group both by GDP nominal and tax revenue meaning Indonesia taxation is quite big in quantity compared to smaller states with smaller GDP nominal than Indonesia and other G20 members. Because if we take a look at the tax ratio to GDP that most of a nation’s tax revenues only reach up to half of their GDP, means the higher GDP along with the higher tax revenues. But if we take a look at either, although having huge GDP and tax revenue, Indonesia Tax ratio to GDP is also quite small compared to most other countries and smaller than the World Bank recommended 15% minimum to GDP. According to IMF in 2020, with almost similar percentage of tax ratio to GDP in 2022, Indonesia is ranked 157 out of 189 nations. Therefore, Indonesia taxation capabilities still weaker or could not grip tax revenue from its proportion of GDP as much as most of nations and still suitable to be counted as developing in terms of taxation. Indonesia might be still low on its effort to maximize its potency in overall taxation compared to GDP, but in terms of ranking paying taxes and tax treaty, Indonesia has shown its effort to be better than most of the developing nations.


G20 ranking in Ease Business of Paying Taxes

No Country Paying Taxes Score  


Country Paying Taxes Score  


Country Paying Taxes Score
1 Canada 88,10 2 South Korea 87,40 3 United States 86,80
4 Turkey 86,60 5 United Kingdom 86,20 6 Australia 85,70
7 European Union 82,75 8 Germany 82,20 9 Japan 81,60
10 South Africa 81,20 11 Russia 80,50 12 Saudi Arabia 80,50
13 France 79,20 14 Indonesia 75,80 15 China 70,10
16 India 67,60 17 Mexico 65,80 18 Italy 64,00
19 Argentina 49,30 20 Brazil 34,40
G20 Average 75,79   World Average 69,12


According to the World Bank in 2020, in their article of Ease of Doing Business, Indonesia has performed better for business to pay its taxes. This scoring has meaning in terms of taxation. Indonesia has advanced its internal taxation administration to induce and enable a healthy environment for business like most advanced countries. The scoring itself include tax payments for a manufacturing company in 2018, Time required to comply with 3 major taxes (hours per year), Total tax and contribution rate (% of commercial profits) and post filing index. Therefore, it is proven that Indonesia’s paying tax score is fit with G20 average and also above the world average showing that its tax administration is well perform for business just like developed nations.

G20 ranking in tax treaty by amount

No Country Number of Tax Treaty  


Country Number of Tax Treaty  


Country Number of Tax Treaty
1 United Kingdom 131 2 France 119 3 China 102
4 Italy 100 5 Germany 95 6 India 95
7 Canada 94 8 South Korea 94 9 Turkey 87
10 Russia 85 11 South Africa 79 12 European Union 78
13 Japan 75 14 Indonesia 70 15 United States 66
16 Mexico 60 17 Saudi Arabia 54 18 Australia 45
19 Brazil 35 20 Argentina 21
G20 Average 79   Inclusive Framework Average 42


G20 Rank of Tax Treaty Compliance with BEPS Inclusive Framework (Action 6)

No Country Compliance Rate  


Country Compliance Rate  


Country Compliance Rate
1 Japan 58,67% 2 Australia 48,89% 3 India 44,21%
4 South Korea 43,62% 5 Russia 42,35% 6 Saudi Arabia 40,74%
7 United Kingdom 40,46% 8 Canada 38,30% 9 France 34,45%
10 European Union 30,34% 11 Indonesia 30,00% 12 Argentina 19,05%
13 Brazil 8,57% 14 Mexico 5,00% 15 Germany 4,21%
16 China 3,92% 17 Italy 2,00% 18 Turkey 0,00%
19 South Africa 0,00% 20 United States 0,00%
G20 Average 24,74%   Inclusive Framework Average 17,76%


Regarding International taxation, Indonesia has shown its good intention to cooperate with other nations and with the international system itself. Indonesia is even having more tax treaties than the United States and Australia as developed nations and the OECD/G20 BEPS Inclusive Framework average although still below G20 average. Even better when it’s regarding the tax treaty compliance to the inclusive framework action 6 that 30% of Indonesia’s tax treaties are comply or suitable with the international regime’s standards. Better than even the G20 average of 24,74% compliant, some of the G20 developed countries and most of the members of inclusive framework. This indicator showing that Indonesia truly supports of international cooperation either bilaterally shown by the amount of tax treaties or multilaterally shown by the compliance to the international regime.  This ranking has meaning that Indonesia in International tax cooperation, Indonesia’s position is in the middle or suitable to show itself as middle power that represent the developing nations because some of tax indicator of Indonesia is still far below international average.


TBrights is a tax consultant in Indonesia which currently is an integrated business service in Indonesia providing comprehensive tax and business services

By Olina Rizki Arizal



“World Economic Outlook Database, October 2022”. International Monetary Fund. 11 October 2022. Retrieved 20 March 2023.

Ping, J. (2003, Oktober). Middle power statecraft: Indonesia and Malaysia. University of Adelaide.

Carr, Andrew (2014). Is Australia a middle power? A systemic impact approach. Australian Journal of International Affairs, 68(1), 70–84. doi:10.1080/10357718.2013.840264,of%206.5%25%20over%20this%20period.,0%2C8%25%20real%20respectivamente.,revised%20estimate%20of%202021%2D22.

“World Economic Outlook Database, October 2022”. International Monetary Fund. 11 October 2022. Retrieved 20 March 2023. en.pdf?expires=1679366973&id=id&accname=guest&checksum=4A301030A027752DA2CAA8AFF8DAEA9B

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