Tindakan Spesifik Tindakan BEPS 5 yang terakhir adalah secara khusus mewajibkan aktivitas substansial untuk setiap rezim preferensial dengan Standar Global setelah rezim pajak preferensial diinformasikan dan diidentifikasi. Dilihat dalam konteks pekerjaan BEPS yang lebih luas, persyaratan ini berkontribusi pada pilar kedua Proyek BEPS, yaitu menyelaraskan perpajakan dengan substansi dengan memastikan bahwa laba kena pajak tidak lagi dapat dialihkan secara artifisial dari negara-negara dimana nilai diciptakan. Kerangka kerja yang dituangkan dalam Laporan tahun 1998 sudah memuat aktivitas yang substansial. Faktor ini melihat apakah suatu rezim “mendorong operasi atau pengaturan yang murni berbasis pajak” dan menyatakan bahwa “banyak rezim pajak preferensial yang merugikan dirancang sedemikian rupa sehingga memungkinkan pembayar pajak memperoleh manfaat dari rezim tersebut sambil terlibat dalam operasi yang murni berbasis pajak. dan tidak melibatkan kegiatan substansial”. Oleh karena itu, standar Global yang telah ditetapkan oleh BEPS Action 5 dibagi menjadi dua jenis yaitu untuk Rezim IP dan Rezim Non-IP.[1]
Standar Global tentang Persyaratan Kegiatan Substansial dalam konteks rezim Kekayaan Intelektual
Rezim yang memberikan preferensi pajak atas pendapatan yang berkaitan dengan IP meningkatkan dasar yang mengikis kekhawatiran yang menjadi fokus kerja FHTP. Pada saat yang sama, diakui bahwa industri yang kaya akan kekayaan intelektual merupakan pendorong utama pertumbuhan dan lapangan kerja dan negara-negara bebas memberikan insentif pajak untuk kegiatan penelitian dan pengembangan (R&D), asalkan insentif tersebut diberikan sesuai dengan prinsip-prinsip yang disepakati oleh negara-negara di dunia. FHTP. Oleh karena itu, pendekatan yang diadopsi oleh FHTP yang memerlukan aktivitas substansial tidak dimaksudkan untuk merekomendasikan rezim Kekayaan Intelektual tertentu, melainkan dirancang untuk menggambarkan batasan luar dari rezim Kekayaan Intelektual yang memberikan manfaat bagi penelitian dan pengembangan namun tidak menimbulkan dampak berbahaya terhadap negara lain.[2] :
- Wajib Pajak yang Memenuhi Syarat : Wajib Pajak yang memenuhi syarat mencakup perusahaan dalam negeri, Bentuk Usaha Tetap (BUT) dalam negeri dari perusahaan asing, dan BUT asing dari perusahaan dalam negeri yang dikenakan pajak di wilayah hukum yang memberikan manfaat. Pengeluaran yang dikeluarkan oleh suatu PE tidak dapat mengkualifikasikan pendapatan yang diperoleh kantor pusat sebagai pendapatan yang memenuhi syarat jika PE tersebut tidak beroperasi pada saat pendapatan tersebut diperoleh.
- Qualifying IP assets: The only IP assets that could qualify for tax benefits under an IP regime are patents and other IP assets that are functionally equivalent to patents. IP assets that are functionally equivalent to patents are (i) patents defined broadly, (ii) copyrighted software, and (iii) in certain circumstances set out below, other IP assets that are nonobvious, useful, and novel.
- Qualifying expenditures: Qualifying expenditures must have been incurred by a qualifying taxpayer and they must be directly connected to the IP asset. Jurisdictions will provide their own definitions of qualifying expenditures and such definitions must ensure that qualifying expenditures only include expenditures that are incurred for the purpose of actual R&D activities. They would include the types of expenditures that currently qualify for R&D credits under the tax laws of multiple jurisdictions. They would not include interest payments, building costs, acquisition costs or any costs that could not be directly linked to a specific IP asset.
- Overall expenditures: Overall expenditures should be defined in such a way that, if the qualifying taxpayer incurred all relevant expenditures itself, the ratio would allow 100% of the income from the IP asset to benefit from the preferential regime. This means that overall expenditures must be the sum of all expenditures that would count as qualifying expenditures if they were undertaken by the taxpayer itself
- Overall income: Jurisdictions will define “overall income” consistent with their domestic laws on income definition after the application of transfer pricing rules. The definition that they choose should comply with the two main principles “Income benefiting from the regime should be proportionate” and “Overall income should be limited to IP income”
- Outsourcing: Allowing only expenditures incurred by unrelated parties to be treated as qualifying expenditures thus achieves the goal to only grant tax benefits to income arising from the substantive R&D activities in which the taxpayer itself engaged that contributed to the income. Jurisdictions could narrow the definition of unrelated parties to include only universities, hospitals, R&D centers and non-profit entities that were unrelated to the qualifying taxpayer. Jurisdictions could also only permit unrelated outsourcing up to a certain percentage or proportion (while still excluding outsourcing to related parties from the definition of qualifying expenditures).
- Treatment of acquired IP: The basic principle underlying the treatment of acquired IP is that only the expenditures incurred for improving the IP asset after it was acquired should be treated as qualifying expenditures. In order to achieve this, it should exclude acquisition costs from the definition of qualifying expenditures and only allow expenditures incurred after acquisition to be treated as qualifying expenditures.
- Tracking of income and expenditures: Tracking should be fairly simple, since all qualifying expenditures incurred by that company will determine the benefits to be granted to all the IP income earned by that company. Once a company has more than one IP asset or engages in any degree of outsourcing or acquisition, however, tracking becomes essential. Tracking must also ensure that taxpayers have not manipulated the number of overall expenditures to inflate the amount of income that may benefit from the regime. This means that taxpayers will need to be able to track the link between expenditures and income and provide evidence of this to their tax administrations.
- Grandfathering and safeguards: Grandfathering means the FHTP decided that where a regime is in the process of being eliminated it shall be treated as abolished if (1) no new entrants are permitted into the regime, (2) a definite date for complete abolition of the regime has been announced, and (3) the regime is transparent and has effective exchange of information.” In order to mitigate the risk that new entrants will seek to avail themselves of existing regimes with a view to benefiting from grandfathering, jurisdictions should implement the following safeguards “Enhanced transparency for new entrants entering the regime” and “Measures that would allow IP assets to benefit from grandfathered regimes not consistent after 31 December 2016 or one year after 2015 report released.”
- Rebuttable presumption: In the absence of other information from a taxpayer, a jurisdiction would determine the income receiving tax benefits. Taxpayers would have the ability to prove that more income should be permitted to benefit from the IP regime in exceptional circumstances where taxpayers that have undertaken substantial qualifying R&D activity in developing a qualifying IP asset or product.
Substantial activity requirement in the context of non-IP regimes
Action 5 requires substantial activity not only for IP regimes but for all preferential regimes. The FHTP has therefore considered the application of the substantial activity requirement to other preferential regimes that have been identified and reviewed by the FHTP since the 1998 Report. A more detailed consideration of how this requirement would apply to specific regimes would need to take place in the context of the specific category of regime being considered. The discussion below sets out the principle that will apply in the context of each non-IP regimes[3]:
- Headquarters regimes: Headquarters regimes grant preferential tax treatment to taxpayers that provide certain services such as managing, coordinating or controlling business activities for a group as a whole or for group members in a specific geographical area. These regimes may raise concerns about ring-fencing or because they provide for an artificial definition of the tax base where the profits of an entity are determined based on a “cost-plus” basis but certain costs are excluded from the basis or particular circumstances are not taken into account. These features could be addressed by the existing factors, but these regimes could also raise concerns in respect of substance.
- Distribution and service center regimes: Distribution center regimes provide preferential tax treatment to entities whose main or only activity is to purchase raw materials and finished products from other group members and re-sell them for a small percentage of profits. Service center regimes provide preferential tax treatment to entities whose main or only activity is to provide services to other entities of the same group. A concern with such regimes is that they may have ring-fencing features. In addition, they may raise concerns that they permit an artificial definition of the tax base. Although these concerns may be addressed through the existing factors, concerns with respect to substance could remain.
- Financing or leasing regimes: Financing and leasing regimes are regimes which provide a preferential tax treatment to financing and leasing activities. The main concerns underlying these regimes include, among others, ring-fencing considerations and an artificial definition of the tax base. Again, those concerns could be addressed through the existing factors.
- Fund management regimes: Fund management regimes grant preferential tax treatment to income earned by fund managers for the management of funds. In exchange for its services, the fund manager receives compensation that is computed on the basis of a pre-agreed formula. The focus is not the taxation of the income or gains of the fund itself or of the investors in a fund but the income earned by fund managers from the management of the fund. The remuneration of the fund manager and how and where this is taxed may raise issues of transparency and these could in part be dealt with by the compulsory spontaneous exchange of rulings.
- Banking and insurance regimes: Banking and insurance regimes provide preferential tax treatment to banking and insurance activities. The main concern is linked to the benefits that they provide to income from foreign activities. If benefits are only provided to foreign income, then this could be addressed through the existing ring-fencing factor. In terms of substance, the regulatory environment, where applicable, should already ensure that a business is capable of bearing risk and undertaking its activity. However, in the context of insurance, it may be more difficult to easily identify those activities and regimes that raise concerns in respect of substance versus those that do not because of the possibility that risks may have been re-insured.
- Shipping regimes: Shipping regimes provide a preferential tax treatment to shipping activities and are designed taking into consideration significant non-tax considerations. They may also raise concerns under the substantial activity analysis where they permit the separation of shipping income from the core activities that generate it.
- Holding company regimes: can be broadly divided into two categories (i) those that provide benefits to companies that hold a variety of assets and earn different types of income (e.g. interest, rents, and royalties) and the substantial activity requirement should require qualifying taxpayers to have engaged in the core activities associated with those types of income (ii) those that apply only to companies that hold equity participations and earn only dividends and capital gains and the substantial activity requirement should be addressed in other action or under other existing factors.
Most of the non-IP Regimes are similar to IP Regime in terms of how to address the rising concern with existing factors such as Exchange of Information and substantial activity mentioned earlier or with other action such as Action 2 to neutralize the effects of hybrid mismatch arrangement or Action 6 to prevent treaty abuse.
Global Standard on Substantial Activities in no or only nominal Jurisdictions
The Inclusive Framework on BEPS has decided to resume the application of the substantial activities requirement for no or only nominal tax jurisdictions. Originally criteria set out in the harmful tax framework from 1998, it had not been applied to date. However, with the elevation of the substantial activities’ requirements in preferential regimes, and the broad-based membership of the Inclusive Framework working together on an equal footing, it was considered the right time to ensure that equivalent substance requirements apply in no or only nominal tax jurisdictions. This global standard means that mobile business income cannot be parked in a zero-tax jurisdiction without the core business functions having been undertaken by the same business entity, or in the same location. In doing so, the Inclusive Framework will ensure that substantial activities must be performed in respect of the same types of mobile business activities, regardless of whether they take place in a preferential regime or in a no or only nominal tax jurisdiction.[4]
The 12 no or only nominal tax jurisdictions (Anguilla, Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Jersey, Turks and Caicos Islands, United Arab Emirates) have been exchanging information under the NTJ standard since 2021. The exchanges not only provide key data on the substance and activities of entities in no or only nominal tax jurisdictions to the jurisdictions in which the immediate and ultimate parent and the beneficial owners of the entities are resident but also enable receiving tax administrations to carry out risk assessments and to apply their controlled-foreign company, transfer pricing and other anti-base erosion and profit shifting provisions. In order to ensure the effectiveness of the NTJ standard in practice, the FHTP is carrying out annual monitoring of the compliance of the 12 no or only nominal tax jurisdictions. [5]
Impact to Indonesia
In Indonesia, as mentioned in the previous chapter, most of the currently identified preferential tax regimes are not harmful thus there is no need for any substantial requirement to take place. The global standard may be required if the Indonesian Government releases tax regimes and ruling that might be preferential and identified as harmful by FHTP. Although Indonesia might have to review its corresponding countries that have implemented a preferential tax regime, especially with no or only nominal tax jurisdiction. It is because mobile business income cannot be parked in a zero-tax jurisdiction without the core business functions having been undertaken by the same business entity, or in the same location including Indonesia business entity or any business entity taking place in Indonesia.
Thus, in order to minimize the effect of the preferential regime, Indonesia and some other countries also have become part of Global Forum on Transparency and Exchange of Information for Tax Purposes that recommend Jurisdictions Participating in Automatic Exchange of Information. Then referring to the Participating Jurisdiction as a Foreign Jurisdiction that is bound by the Government of Indonesia in an International Agreement which has the obligation to submit financial information automatically. In other hands there is Jurisdiction Purpose of Reporting or Participating Jurisdiction which is the destination for the Government of Indonesia in carrying out the obligation to submit financial information automatically. Exchange of Financial Information, hereinafter referred to as Exchange of Information, is an activity to convey, receive, and/or obtain financial information relating to taxation based on International Agreements, Standard General Reporting Standards), hereinafter (Common Reporting referred to as CRS is a standard that contains reporting, identification procedures Financial Accounts, and Exchange of Information referred to or regulated in International Agreements to exchange Information between countries.[6]
According to Ministry of Finance Regulation (MFR) 19 of 2018 which is supported by Announcement 1 of 2022, all jurisdictions mentioned have at least cooperated in reporting information automatically regarding financial accounts to Indonesia. So that if one or several of the 12 jurisdictions still implements or will apply a tax regime that could interfere with Indonesian taxation with related countries, Indonesia already knows the financial information of Indonesian taxpayers in that country which may be affected or experience benefits for further action to be considered. Some of the 12 jurisdictions even have tightened in term of information exchange with higher regulation such as Directorate General of Tax Circular Letter for British Virgin Island, Presidential Decree for Bahamas, Bermuda, Guernsey, Isle of Man, Jersey and even a tax treaty such as with United Arab Emirate and Bahrain (although still on pending). Although it must be noted that Cayman Island does not bound other than PMK 19 of 2018 while having a huge amount of financial relation with Indonesia, it might be altered with Indonesian Bank overseas branch on Cayman Islands that is overseen by Indonesia government.
It also has to be noted from the attachment below that some of these 12 jurisdictions might be economically small but at the same time contribute more on Indonesia inbound investment. For example, Bermuda, British Virgin Island and Cayman Island are economically smaller than well-known United Arab Emirates, but contribute more with higher ranking in investment to Indonesia. This might be because some of the pooled capitals around the world, seeking zero tax, invested in Indonesia through these small Jurisdictions for higher interest from Indonesia’s payment but expecting zero taxes on these jurisdictions. Better to note that this kind of profit shifting is one of the main goals of the BEPS international regime and proved by the fact that there are more tax BEPS cases in these three jurisdictions than the rest of 9 jurisdictions. Therefore, it is significant to support the third specific action of BEPS to be implemented not only to the economically big jurisdiction but also to small states that might rely on a preferential regime or relevant harmful tax practice.
In conclusion, the last Action Specific of BEPS Action 5 is to specifically require substantial activity for any preferential regime with Global Standard after the preferential tax regime is informed and identified. Seen in the wider context of the work on BEPS, this requirement contributes to the second pillar of the BEPS Project, which is to align taxation with substance by ensuring that taxable profits can no longer be artificially shifted away from the countries where value is created. Global standard that has been set out by BEPS Action 5 divided into two types which is for IP Regimes and Non-IP Regimes. The global standard of substantial activity requirement on IP Regime comprises Qualifying taxpayers; Qualifying IP assets; Qualifying expenditures; Overall expenditures; Overall income; Outsourcing; Treatment of acquired IP; Tracking of income and expenditures; Grandfathering and safeguards; and Rebuttable presumption. These substantial activity requirements set the boundaries so that preferential IP Regimes are not out of limits and risking Base Erosion and profit shifting to happen and could also be called as existing factors. On the other hand, Non-IP Regimes later divided into Headquarters Regimes, Financing and Leasing Regimes, Banking and Insurance Regimes, Distribution Center and Service Centre Regimes, Shipping Regimes, Holding Company Regimes, Fund Management Regimes and Miscellaneous Regimes. A more detailed consideration of how this requirement would apply to specific regimes would need to take place in the context of the specific category of regime being considered although the same existing factors in IP Regimes might become useful in order to set boundaries of non-IP Regimes also.
For Indonesia due to most of the current identified preferential tax regimes are not harmful thus there is no need for any substantial requirement to take place. Although Indonesia might have to review its corresponding countries that have implemented a preferential tax regime, especially with no or only nominal tax jurisdiction. While most of the jurisdictions mentioned have at least cooperated in reporting information automatically regarding financial accounts to Indonesia and even some of the 12 jurisdictions even have tightened in terms of information exchange with either Directorate General of Tax Circular Letter, Presidential Decree or Tax Treaty. Some of these 12 jurisdictions might be economically small but at the same time contribute more on Indonesia inbound investment and have some tax cases related to BEPS with Indonesia. Therefore, it is significant to supporting the third specific action of BEPS to be implemented not only to the economically big jurisdiction but also to small states that might rely on preferential regime or relevantly harmful tax practice.
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
Partner
ATTACHMENTS
Indonesia And 12 No or Only Nominal Tax Jurisdiction Relation
| No | Jurisdiction | PENG 1/PJ/2022 | Higher Regulation | Tax Cases[7] | Investment Rank[8] | Comments | |
| Participating | Reporting Destination | ||||||
| 1 | Anguilla | Yes | No | N/A | N/A | 85th | No significant relation |
| 2 | Bahamas | Yes | No | Perpres 29 Tahun 2019 | 1 Case | 139th | Currently Increasing Economic Cooperation |
| 3 | Bahrain | Yes | No | Tax Treaty still Pending | 1 Case | N/A | Economic and Investment Cooperation achieved but need to be ratified |
| 4 | Barbados | Yes | Yes | N/A | N/A | N/A | Minor Trade Relations |
| 5 | Bermuda | Yes | No | Perpres 95 Tahun 2014 | 18 Cases | 9th | Minor Trade Relations |
| 6 | British Virgin Island | Yes | No | Surat Direktur Jenderal Pajak Nomor S – 321/Pj.341/2006 | 17 Cases | 12th | Significant Indonesian financial ownership |
| 7 | Cayman Islands | Yes | No | N/A | 45 Cases | 19th | Overseas Branch of Bank Danamon, BRI, Mandiri, CIMB Niaga, Maybank Indonesia |
| 8 | Guernsey | Yes | Yes | Perpres 92 Tahun 2014 | N/A | 135th | No significant relation |
| 9 | Isle of Man | Yes | Yes | Perpres 93 Tahun 2014 | N/A | 133rd | No significant relation |
| 10 | Jersey | Yes | Yes | Perpres 91 Tahun 2014 | N/A | N/A | No significant relation |
| 11 | Turks and Caicos Islands | Yes | No | N/A | N/A | N/A | No significant relation |
| 12 | United Arab Emirates | Yes | No | Tax Treaty | 2 Cases | 32nd | Overseas BSI Branch |
[1] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 – 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9789264241190-en.
[2] Ibid
[3] OECD (2015), Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance, Action 5 – 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, Paris, https://doi.org/10.1787/9789264241190-en.
[4] OECD (2015), Melawan Praktik Pajak yang Merugikan dengan Lebih Efektif, Memperhatikan Transparansi dan Substansi, Laporan Akhir Aksi 5 – 2015 , Proyek Erosi Basis dan Pergeseran Laba OECD/G20, OECD Publishing, Paris, https://doi. org/10.1787/9789264241190-id .
[5] Ibid
[6] Peraturan Menteri Keuangan No 19 Tahun 2018
[7] Perkara Pajak terkait BEPS antara Indonesia dan Yurisdiksi Terkait diperoleh dari Direktori Mahkamah Agung Indonesia
[8] https://nswi.bkpm.go.id/data_statistik
