Taxation and Illicit Financial Flow
Yustinus Prastowo
Center for Indonesia Taxation Analysis
Subject to be discussed:
•
•
•
•
International inequality/tax evasion.
Tax Haven, Secrecy Jurisdiction.
BEPS.
Tax Planning, Tax Avoidance, Tax Evasion.
“
For each dollar of
aid that goes into Africa, at least
five dollars flows out under the
table. The time has come to
confront the tax haven monster.
”
fair and transparent
payment of tax is at the
heart of the social
contract between
business and society
Marc Lopatin
No. 243, May 2004
30th May 2007
3
• Global Financial Integrity (GFI) estimates that
illicit financial outflows from the developing
world totaled a staggering US$946.7 billion in
2011, with cumulative illicit financial outflows
over the decade between 2002 and 2011 of
US$5.9 trillion
• Indonesia is a country with USD 18 mio/year
IFF.
4
Some statistics
 In 1996 money laundering was estimated to be
between USD 590Bn to 1,5 Trillion
 World Bank estimates the value of criminal activities,
corruption and tax evasion to be between $1 trillion
and $1.6 trillion per year
 OECD estimates that 50% of all cross border trade is
made via tax havens
 In 2004 US MNE’s paid 2,3 % in tax (16 bn on 700 bn of
foreign active earnings)
 In 2006 UK established that 3,5 % of tax payers
provide information re offshore accounts.
5
“One recent worldwide estimate of individual
income evasion losses attributable to the tax
havens, based on a straightforward
methodology, was $ 255 billion. Based on the
ratio of estimated offshore wealth to the total,
the U.S. and Canada would be losing over 45
billion, Europe about 74 billion, the Middle
East and Asia about 116 billion and Latin
America nearly 20 billion….National stakes in
such losses propelled the EU, Japan, and the
United States to launch a coordinated attack
in 1998.” --- Robert T.Kudrle
COMPARISON INDONESIA TAX RATIO TO OTHER COUNTRIES
Keterangan: *Hasil kalkulasi Prakarsa dengan Pendekatan Tax
Ratio dalam arti luas
Sumber: IMF 2011 (diolah)
The main problem/challenges:
•
•
•
•
•
•
Existence of tax haven/secrecy jurisdiction
Transfer Pricing practice
Abuse of tax treaty
International tax structuring
Lack of exchange of information
The “myth’ of international tax law
Some statistics (cont.)



BVI has 19,000 inhabitants but 830 000 companies
registered
One address alone in the Cayman Islands serves as the
registered office for > 18 000 companies
Assets equal 1,3 times GDP in Norwegian banks, 2,5
times GDP for the Euro zone. In Cayman Islands the
assets total > 700 times the GDP
9
Convenient knowledge:
CFC – Controlled Foreign Corporation
DTT – Double Tax Treaty
FBAR – Foreign Bank Account Report (US)
LOB – Limitation of Benefits
QI – Qualified Intermediary
Tax Haven - ?
TIEA – Tax Information Exchange Agreements
White, Grey, Black List – CFC-related lists
10
Overview
Tax Haven
A country or territory that has lower or no
taxes and provides a safe place for deposits
in order to attract capital
Tax havens create
tax competition
among
governments in
order to maintain
or attract
depositors via the
altering of
banking/fiscal
policies and rules.
11
12
Tax haven Debate
For
• Avoidance of excessive
tax burden
• Greater security and
lower risk
• Privacy
• Tax competition
encourages pro-growth
tax policies
13
Tax haven Debate
Against
• Lack of transparency
• Tax avoidance and loss
of tax revenue
• In some instances, it
perpetuates illegal
activity i.e. money
laundering
14
Tax Havens - The top five secrecy jurisdictions
 Delaware, US: The world's top secrecy jurisdiction. Register a company
here and no one will ever know. If you have overseas income, it will be
tax exempt.
 Luxembourg: Europe's most powerful investment management centre. It
does require company accounts to be publicly available. But in virtually
every other category secrecy rules.
 Switzerland: The traditional home of the opaque bank. For years, it
resisted international requests for tax information exchange.
 Cayman Islands: The Caribbean island has a serious budget crisis. Its
leaders take a dim view of having the "good name" of the most powerful
hedge fund centre tarnished by accusations.
 City of London, UK: The International Narcotics Control Strategy Report
said last year: "Illicit cash is consolidated in the UK and then moved
overseas where it can readily enter the legitimate financial system." It
adds: "Drug traffickers and other criminals are able to launder substantial
amounts of money in the UK despite improved anti-money laundering
measures.“
guardian.co.uk
15
Integrated financial markets pose new
global challenges
• New opportunities for illicit activities:
– Money laundering
– Misuse of corporate vehicles
– Terrorist financing
– Tax abuse
– Threats to stability of financial system
All activities which thrive in climate of secrecy,
non-transparency and non-cooperation
16
The response of governments
• Launching the FATF (Financial Action Task
Force)
• Creating the FSF (Financial Services Forum)
• Creating the OECD Forum on Harmful Tax
Practices
• Parallel tracks but common goals:
– To improve transparency
– To raise governance standards in financial centers
– To encourage cooperation to counter abuse
17
Offshore is a big and growing issue
$5-7 trillion held offshore
300,000 Shell Companies in the BVI
$9.4 billion from BVI to China
Brazil reports a deficit of $4 billion trade with
Caribbean Islands
• Singapore now 3rd biggest private wealth centre
after Luxemburg and Switzerland
• Caymans 5th largest deposit banking center in
the world (population 46,600)
•
•
•
•
18
International Offshore Financial Centers
17
What does OECD mean by a tax
haven?
• Jurisdictions characterized by:
– Lack of transparency
– Lack of effective exchange of information
• So a low tax jurisdiction is not necessarily a tax
haven
20
Much money held offshore is there legally
OFCs may:
– Offer legitimate tax planning opportunities
– Provide a neutral regulatory environment for
residents of other countries to do business e.g.
collective investment funds; captive insurance
– Be used for non-commercial reasons
21
Yet revenue implications of the illegitimate use of tax
havens can be serious
• Ireland collects almost €900 million from Irish
residents with offshore Channel Island accounts
• Italian tax amnesty results in €84 billion being
repatriated, of which one-third from Switzerland
• Senate Finance Committee quotes estimates of $4070 billion lost to tax havens
• UK expects to recover £1.9 billion from its recent
clampdown on offshore evasion
The reality is we don’t know exactly,
but sums are large.
22
The broader policy implications
Reducing effective tax rates by encouraging
tax evasion is not good tax policy
– MNEs and individuals can use tax havens to reduce tax rates
– This is not good tax policy since:
• It undermines the fairness and the integrity of the tax system
• It either:
 Restricts the ability of government to reduce tax rates for all
 Requires government to increase tax rates on labor or consumption with
negative impact on labour markets
 Or forces expenditure cuts
 Or raises deficit
• As a matter of public policy, condoning tax abuse is bad
politics
23
OECD objectives
• What does the OECD seek?
– improved transparency
– improved exchange of information
– a co-operative approach
• What is not sought?
– harmonization or setting minimum tax rates
– impinging on national fiscal sovereignty
– an unfair competitive advantage for OECD financial centers
• Two linked initiatives:
– 1998 initiative on Harmful Tax Practices
– 2000 on improving access to bank information
24
OECD approach
Recognizes:
– Interest of government in protecting integrity of tax
system and confidentiality of taxpayer information
– Interest of business community in avoiding excessive
burden
– Countries’ right to tailor their own tax systems to their
own needs
– The need to move towards a level playing field and
mutual benefits
25
Transparency
• Standard developed with co-operative
offshore financial centers
• Key elements
– reliable books and records
– beneficial ownership information
– access to bank information
• Transparency unlikely to be a significant
concern for bona fide business
26
Key principles in model agreement on
exchange of information
• On request only
• Covers civil and criminal tax matters
• Requests cannot be rejected on grounds of dual
criminality requirement or absence of domestic tax
interest
• Parties must have power to obtain bank and ownership
information
• Information must be ‘foreseeably relevant’
• No fishing expeditions
• Protection of taxpayer confidentiality
Almost no compliance burden on business
27
State of play : tax haven work
Only 5 offshore jurisdictions now listed as
un-cooperative tax havens:
Andorra
Monaco
Liechtenstein
Marshall Islands
Liberia
28
State of play: offshore financial centers
33 offshore jurisdictions committed to
transparency and effective exchange of
information:
Aruba
Antigua
Anguilla
Bahamas
Bahrain
Belize
Bermuda
British V.I.
Cayman Is.
Cooks Is.
Cyprus
Dominica
Guernsey
Grenada
Gibraltar
Isle of Man
Jersey
Malta
Mauritius
Montserrat
Neth. Antilles
Niue
Nauru
Panama
Samoa
San Marino
Seychelles
St. Kitts & Nevis
St. Vincent
St. Lucia
Turks & Caicos
US Virgin Is.
Vanuatu
29
STRUCTURE/SCHEME
30
Example 1
Use of (high tax) jurisdictions to establish
conduit entities:
Loan
Loan
NL
INVESTORS
Interest
ITALY
Interest
31
Discussion




Transfer pricing
Treaty application
Limitation on Benefits ?
Concept of Beneficial Ownership
32
Example 2
Use of “Hybrid” corporate structures to optimise taxation of interest
Equity
Loan
33
Discussion
 Qualification legal entities in multiple
jurisdictions
34
Example 3
Use of Special Tax regimes
TOP CO
FIN CO
OP CO
OP CO
Loan
35
Myth and Reality
36
There aren’t any tax havens any more
The myth:
• “The era of bank secrecy is over” (G20, 2009)
The reality:
• The OECD set the bar extremely low – at 12 tax information
exchange agreements (TIEAs) that can be signed with each
other
• When blacklist was introduced, only 4 countries were on it.
• Essentially overnight they signed the requisite TIEAs and
were removed from the blacklist
• TIEAs require you to know the answer before you can ask
the question
37
There aren’t any tax havens any more
The reality:
• For example only 4 pieces of information were
exchanged between the USA and Jersey in
2008
• Christian Chavagneux of the OECD said
“France made 230 requests for information to
18 countries in the first eight months of 2011.
The reply rate was only 30 per cent and the
quality of the information supplied wasn’t
always of the highest quality.”
38
Britain by itself can’t do anything about tax havens
The reality:
• Many of the world’s tax havens are British Crown
Dependencies or Overseas Territories, which we have the
right to legislate for (Kilbrandon Report, 1973)
• For example we overthrew the government in the Turks and
Caicos Islands in 2009
• We could stop praising tepid international action and push,
for example, for country by country reporting
• We could stop making once-off agreements with tax
havens – this only legitimises them and tax evasion,
undermines reform efforts, and doesn’t help developing
countries
39
A mass exodus of big business
The reality:
• Campaigners are pushing for country-by-country reporting
to be included in international accounting standards, which
are used in over 100 countries
• Britain cracking down on crown dependencies and overseas
territories is entirely independent from whether or not a
business chooses to be domiciled in the UK
• Companies want to access the UK market. The government
could leverage this to increase transparency
40
Tax havens can stimulate investment
The myth:
• China and the UK do very well as a result of tax havens
The reality:
• Do we really want money that should be tax revenue in, for
example, Mali?
• Developing countries lose more via tax havens than they
receive in aid & they allow corrupt governments to rob states
• The best way for developing countries to grow their way out of
poverty, increase life expectancy and reduce infant mortality is
through public services and public investment in the
infrastructure long-term business needs
• Financial inflows to the City only benefit the 1%
41
Trickle down doesn’t work
Average incomes in the UK
£350,000
£300,000
£250,000
£200,000
Top 1%
Top 10%
£150,000
Bottom 90%
£100,000
£50,000
£1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: http://g-mond.parisschoolofeconomics.eu/topincomes/
42
What about recent action by Cameron at the G8?
What Cameron has done:
• Companies registered in Britain would come under a legal
obligation to obtain and hold adequate, accurate and current
information on the ultimate owner who benefits from the
company – and be required to place the information on a
central register, maintained by Companies House
• Tax authorities have a better chance of tracking the true
ownership of trusts and shell companies
• Britain expects the G8 to call on the OECD to implement a new
agreement modelled on the US-led Financial Action Task Force
on tax transparency, which is supported by 75 countries. The
deal would lead to "automatic exchange", in which countries
pass on tax details without a request having to be made
43
What about recent action by Cameron at the G8?
The reality:
• Companies House doesn’t have the resources to police
compliance with the beneficial ownership register, so it will
essentially be voluntary
• Rumour has it that we may only get a requirement that
companies know who their beneficial owners are
if enquiry is made of them
• Information won’t be publicly available
• Need more info in order to properly determine the tax due
• Developing countries must also benefit from automatic
information exchange
• Many tax departments, including in the UK, are hugely underresourced
44
Tax Planning, Tax
Avoidance, Tax Evasion
Tax Evasion
• the efforts by taxpayers to mitigate taxes by illegal means. What can be
defined as legal or illegal depends on the national laws.
• the taxpayer avoids the payment of tax without avoiding the tax liability, so
that he escapes the payment of tax that is unquestionably due according to
the law of the taxing jurisdiction and even breaks the letter of the law.
(Russo et. al, 2007)
• An intention to avoid payment of tax where there is actual knowledge of
liability. It usually involves deliberate concealment of the facts from the
revenue authorities, and is illegal. (Rohatgi: 2007).
• There is a correlation but still seems ambiguious that legal tax avoidance
can push the public motive to evade the tax obligation (Neck and
Schneider, 2011).
• Philosophically, tax evasion also correlate with any other aspects of sociopolitical dimension (McGee,2007).
For internal discussion only
46
Some common example of tax evasion
• The failure by a taxable person to notify the tax authorities of his presence or
activities in the country if he is carrying on taxable activities.
• The failure to report the full amount of taxable income.
• The deduction claims for expenses that have not been incurred, or which
exceed the amounts that have been incurred.
• Falsely claiming relief that is not due.
• The failure to pay over to the tax authorities the tax properly due.
• The departure from a country leaving taxes unpaid with no intention to paying
them.
• The failure to report items or sources of taxable income, profit or gains, where
there is either a general obligation in the law to volunteer such information.
For internal discussion only
47
Tax Avoidance
• Tax avoidance is not tax evasion. Many have to try
to formulate an exact definition but still unclear
enough.
• The art of dodging tax without breaking the law
(Justice Reddy, McDowell & Co vs CTO, 1985)
• The minimisation of one’s tax liability by taking
advantage of legally available tax planning
opportunities. (Black’s Law Dictionary).
• An arrangement of a taxpayer’s affairs that is
intended to reduce his liability and that although
the arrangement could be strickly legal is usually in
contradiction with the intent of the law it purports
to follow. (OECD).
For internal discussion only
48
What OECD said
 OECD just provides three elements of tax
avoidance:
(1) almost invariably there is present an element of artificially to it
or, to put this another way, the
various arrangements in a
scheme do not have
business or
economic aims as their primary
purpose’
(2) secrecy may also be a feature of modern
avoidance:
and
(3) Tax avoidance often takes advantage of loopholes in
the
law or of applying legal provisions,
for purposes for which
they
were not intended.
 OECD Model (2000)  the prevention of tax
avoidance is one of the purposes of double tax
treaties.
For internal discussion only
49
Tax Planning
• Many countries make a distinction between
acceptable tax avoidance and unacceptable tax
avoidance.
• Unacceptable TA is achieved by transactions that
are genuine and legal but involve deceit or
pretence or sham tax structures. (Lord
Goff, Rohatgi:2007)
• Contrary, Acceptable TA (tax planning) reduces
the tax liability through the movement (or nonmovement) of persons, transactions or funds, or
other activities that are intended by legislation 
also called tax mitigation.
For internal discussion only
50
Categorizing Tax Planning
Illegal
Transaction
Tax Evasion
(Tax Fraud)
Tax Avoidance
(Fraus Legis)
Legal
Tax Planning
For internal discussion only
51
Skema International Tax Planning
Sumber: PriceWaterhouse Coopers, 2007.
Google Double Irish / Dutch Sandwich II - 2009
Google
(Pre-IPO)
$
Capital
Cost
$
Sharing
Agreement Buy-In
Google Ireland Holdings
Search + Advertising
Technology –
Europe, Middle East &
Africa
Google Double Irish / Dutch Sandwich II - 2009
Google
(Pre-IPO)
Sharing Cost
Agreement
Google Irelend Holdings
Search + Advertising Technology Europe. Middle East &
Africa
Ireland
European
Affiliates &
Customers
Bermuda
$$$
$$
Royalties
License of Technology
Google Netherlands BV
(No Employees)
Middle East
Affiliates &
Customers
Africa
Affiliates &
Customers
$$
Royalties
$ Fees
($ Bilion Revenue 2009)
Google Ireland Ltd
2000 Employees
Sub-License of
Technology
Apple’s Scheme
Apple Inc.
(United States)
Apple
Operations
International
APPLE’S OFFSHORE SUBSIDIARIES
Apple Retail
Holding Europe
(Ireland)
Apple Retail Belgium
Apple Retail France
Apple Retail Germany
Apple Retail Italia
Apple Retail
Netherlands
Apple Retail Spain
Apple Retail
Switzerland
Apple Retail UK
Apple
Distribution
International
(Ireland)
Apple Singapore
(Singapore)
Apple Asia
In-country
distributors
Apple
Operations
Europe
Apple Sales
International
Country of
Incorporation and Tax
Residence
These 3 subsidiaries are incorporated
in Ireland, but have no country of
tax residence
100 percent owned by Apple
Inc., company that receivesthis is
a holding dividends from most of
Apple’s offshore affiliates. It has
no physical presence and has
never had any employees.
A subsidiary of Apple Operations
International, it had about 400
employees
in
2012,
and
manufactured a line of specialty
computers for sale in Europe.
Contracted
with
third-party
manufacturers in China to make
Apple products which it then sold to
Apple Distribution International. Paid
little or no tax on $74 billion in profit
made from 2009 to 2012.
Apple’s Scheme - Continued
Global Taxes Paid by ASI (Apple Sales International), 2009-2011
2011
2010
2009
Total
$ 38 billion
Pre-Tax
Earning
$ 22 billion
$ 12 billion
$ 4 billion
Global Tax
$ 10 million
$ 7 million
$ 4 million $ 21 million
Tax Rate
0.05%
0.06%
0.1%
0.06%
Foreign Base Company Sales Income Tax Avoided Tax Avoided
2011
$ 10 billion
2012
$ 25 billion
Total
$ 35 billion
$ 3.5 billion $ 10 billion
$ 9 billion
$ 25 billion
$ 12.5 billion $ 17 billion
Vodafone’s Scheme
HK Shareholder
Cayman Co 1
(Cayman Island)
Cayman Co 2
(Cayman Island)
Maritius Co
(Maritius)
Hutchison Essar
(India)
Vodafone UK
Sold
Cayman Co
2 shares
Vodafone Dutch
Marks & Spencer Case
No Consolidation
Joint Taxation
MARKS &
SPENCER
Subsidiaries
are
independent llegal
and fiscal entities
(separate)
UK
Company
UK
Branch
Intermediary
Netherlands
Netherlands
subsidiary
Belgium
subsidiary
France
subsidiary
Germany
subsidiary
subsidiary
Belgium
France
subsidiary
Germany
STARBUCKS’S SCHEME
Starbucks Coffee Inti (USA)
Rain City
Dutch
Partnership
Enterald
Dutch
Partnership
Royalty
Royalty
ALKI LP
UK
Royalty
Starbucks Holding BV
(Netherland)
Starbucks Trading (Swiss)
Starbucks UK
Starbucks Mfg BV
(Netherland)
Kasus Indonesia (I)
• Asian Agri Group diputus MA bersalah melakukan
tax evasion dan dikenai denda Rp 2,5 T 
respondeat superior/vicarious responsibility.
• Penerimaan Pajak masih di level 12,5% (tax
ratio), bandingkan Korea (19%), Jepang
(25%), rerata OECD 35%, Tanzania (16%).
• Uang pajak sebagian besar masih digunakan untuk
membiayai belanja birokrasi dan pelunasan
utang, belanja sosial sifatnya residual.
• Praktik penghindaran dan pengemplangan pajak hal
yang jamak.
• Warga yang ber-NPWP baru 22 juta  UMKM 55
juta, penduduk potensial 110 juta.
• Gayus  mampu menyatukan lembaga penegak
hukum dalam satu payung korupsi: Hakim
Fenomena Gayus
Mampu menyatukan lembaga penegak hukum
dalam satu payung korupsi: Hakim Asnun, Jaksa
Cyrus, Polisi Arafat dan Brigjen Edmond
Ilyas, Penjaga Rutan Brimob, Petugas Imigrasi.
Fenomena Regenerasi Koruptor Muda
Kasus Indonesia (2)
Kejahatan Kehutanan oleh Korporasi
• 124 kasus kejahatan kehutanan dan kerugian negara lk. Rp 691 trilyun
(ICW:2013), menjerat pidana : 37 operator lapangan, 20 direktur
perusahaan, 9 kepala dinas, 4 polisi, 6 anggota DPR, 2 gubernur, 2 bupati.
• Penghindaran atau manipulasi pajak
Contoh Kasus: Kasus PT. Permata Hijau Sawit (2007-2008), Asian Agri Group
(2002-2005), PT Wilmar Nabati Indonesia (2009-2010)
• Pembiaran beroperasi tanpa izin
Contoh Kasus: Beberapa perusahaan sawit seperti Sinar Mas, Wilmar, BGA/
IOI, Musim Mas, dan Astra Agro Lestari di Kalimantan Tengah tidak memiliki
izin pelepasan kawasan hutan (Laporan Hasil Investigasi Kasus Korupsi
Perkebunan, ICW, 2011: 9)
Kejahatan Kehutanan oleh Korporasi
• Alih fungsi kawasan hutan dan Pemanfaatan hasil hutan
tanpa izin
Contoh Kasus: Proyek Perkebunan Sawit Sejuta Hektar di
Kalimantan Timur. Izin yang diberikan oleh Gubernur Kaltim
Suwarna AF kepada 13 perusahaan sawit milik Surya Damai
Group ternyata dimanipulasi. Citra satelit membuktikan
hanya 3 dari 13 perusahaan yang menanam sawit. Sisanya
diketahui hanya mengeksploitasi hutan.
• Perolehan izin pemanfaatan kawasan dan hasil hutan
secara tidak sah
Contoh Kasus: Berdasarkan Investigasi, untuk mendapatkan
1 (satu) izin lokasi di Kabupaten Seruyan , Pengusaha
perkebunan dipungut biaya Rp. 4 milyar. Selain itu, ada
pula suap berdasarkan luas perkebunan sawit yang
dimintakan izin. Sawit Watch menyebutkan bahwa biaya
penerbitan izin lokasi untuk setiap hektar kebun sawit
Birokrasi kita?
• Berjumlah lk. 4 juta pegawai pusat dan daerah.
• Mengurus Rp 1.657 trilyun/tahun.
• Menguras:
Rp 241 trilyun untuk belanja birokrasi.
Rp 518 trilyun transfer ke daerah, dan 50%
dialokasikan untuk belanja pegawai.
Rp 171 trilyun untuk cicilan pokok dan bunga utang.
Rp 299 trilyun untuk subsidi, Rp 143 trilyun subsidi
BBM.
• Indeks Gini 0.41, semakin timpang.
Perbandingan Indeks Pembangunan Manusia 2013
TRANSFER PRICING
Main Issues:
•
•
•
•
•
•
•
•
•
Is Arm’s Length Principle work properly?
The lack of comparability
The problem of cartel or oligopoly
The massive use of intangibles
Cost Contibution Arrangement
New challenge: Formulary Apportionment
Country-by-Country Reporting
Common Consilidated Corporate Tax Base
VAT integration
Unitary Taxation approach of the
EU CCCTB
Source: Erika Siu,2013
Apportionment formula in the
EU CCCTB
• Art. 86: capital, labour and sales. The labour
factor includes wages and employees at equal
weights.
Unitary Taxation approaches of the
US states
Source: Erika Siu,2013
Recent TP Development: Global
Transfer Pricing Arena
United Nations
Multinational
Enterprises
Tax
Practitioners
OECD
Tax Court
Government
Developing
Countries
Multinational
forums
NGOs
Recent TP Development: Global
Change the
principle
Arm;s
length
principle
Limitation
in
application
Global
Formulary
Apportionment
Simplification
measures
Threshold, saf
e harbour, etc
Relaxing the
assumption
Hypothetical
arm’s length
Alternative
practical
applications
Alternative
method, etc
Problem of Value Creation
Business
Restructuring
Local intangibles/
market premium
Intangibles
Location savings
Cost Contribution
Arrangement
Definition? Identification? Benefit test?
Comparables? Transfer pricing method?
WHAT WE CAN DO?
76
BEPS
Base Erosion and Profit Shifting
And
BEPS Action Plan
77
Data on Foreign Direct Investments
•It emerges that in 2010 Barbados, Bermuda and the British Virgin Islands
received more FDIs (combined 5.11% of global FDIs) than Germany (4.77%) or
Japan (3.76%). these three jurisdictions made more investments into the
world (combined 4.54%) than Germany (4.28%).
•in 2010 the British Virgin Islands were the second largest investor into China
(14%) after Hong Kong (45%) and before the United States (4%). Bermuda
appears as the third largest investor in Chile (10%).
•Mauritius is the top investor country into India 24%, while Cyprus (28%), the
British Virgin Islands (12%), Bermuda (7%) and the Bahamas (6%) are among
the top five investors into Russia.
•Special purpose entities (SPE´s) with no or few employees, little or no
physical presence in the host economy, whose assets and liabilities represent
investments in or from other countries, whose core business consists of
group financing or holding activities. For example:
Netherlands, Luxembourg, Austria and Hungary.
78
Competitiveness and taxation
•For a corporation, being competitive means to be able to sell the
best products at the best price, so as to increase its profits and
shareholder value. that investments will be made where
profitability is the highest and that tax is one of the factors.
•International competitiveness, a relatively low corporate tax
burden.
•The four key factors are:
•
(i) no or low effective tax rate;
•
(ii) ring-fencing of the regime;
•
(iii) lack of transparency;
•
(iv) lack of effective exchange of information.
79
Competitiveness and taxation
•The other eight factors are:
•
(i) an artificial definition of the tax base;
•
(ii) failure to adhere to international transfer pricing principles;
•
(iii) foreign source income exempt from residence country taxation;
•
(iv) negotiable tax rate or tax base;
•
(v) existence of secrecy provisions;
•
(vi) access to a wide network of tax treaties;
•
(vii) the regime is promoted as a tax minimisation vehicle;
•
(viii) the regime encourages purely tax-driven operations or arrangements.
•Tax transparency
•More than 800 agreements that provide for the exchange of information in
tax.
•110 peer reviews have been launched and 88 peer review reports have been
completed and published.
•Foreign Account Tax Compliance Act (FATCA).
80
Addressing Base Erosion and Profit Shifting
•Base erosion constitutes a serious risk to
• tax revenues,
• tax sovereignty and
• tax fairness for OECD member countries and
non-members alike.
A significant source of base erosion is profit shifting.
81
Addressing concerns related to base erosion and
profit shifting
•Key pressure areas, includes:
International mismatches in entity and instrument
characterization including hybrid mismatch arrangements
and arbitrage;
Application of treaty concepts to profits derived from the
delivery of digital goods and services;
The tax treatment of related party debt-financing, captive
insurance and other inter-group financial transactions;
82
Addressing concerns related to base erosion and
profit shifting
Key pressure areas
Transfer pricing, in particular in relation to the
shifting of risks and intangibles, the artificial
splitting of ownership of assets between legal
entities within a group, and transactions
between such entities that would rarely take
place between independents;
The effectiveness of anti-avoidance
measures, in particular GAARs, CFC
regimes, thin capitalisation rules and rules to
prevent tax treaty abuse; and
The availability of harmful preferential
regimes.
83
ACTION 1
Address the tax challenges of the digital economy
• Identify the main difficulties that the digital economy poses for the application of existing
international tax rules and develop detailed options to address these difficulties, taking a
holistic approach and considering both direct and indirect taxation.
• Issues to be examined include, but are not limited to,
• the ability of a company to have a significant digital presence in the
economy of another country without being liable to taxation due to the
lack of nexus under current international rules,
• the attribution of value created from the generation of marketable
location-relevant data through the use of digital products and services,
• the characterization of income derived from new business models,
• the application of related source rules, and
• how to ensure the effective collection of VAT/GST with respect to the
cross-border supply of digital goods and services.
• Such work will require a thorough analysis of the various business models in
this sector.
• Expected output: Report identifying issues raised by the digital economy
and possible actions to address them.
• Deadline: September 2014
84
ACTION 2
Neutralise the effects of hybrid mismatch arrangements
•
•
Hybrid mismatch arrangements can be used to achieve unintended double non-taxation or long-term
tax deferral by, for instance, creating two deductions for one borrowing, generating deductions
without corresponding income inclusions, or misusing foreign tax credit and participation exemption
regimes.
Develop model treaty provisions and recommendations regarding the design of domestic rules to
neutralize the effect (e.g. double non-taxation, double deduction, long-term deferral) of hybrid
instruments and entities. This may include:
• (i) changes to the OECD Model Tax Convention to ensure that hybrid instruments and entities (as
well as dual resident entities) are not used to obtain the benefits of treaties unduly;
• (ii) domestic law provisions that prevent exemption or non-recognition for payments that are
deductible by the payor;
• (iii) domestic law provisions that deny a deduction for a payment that is not includible in income
by the recipient (and is not subject to taxation under controlled foreign company (CFC) or similar
rules);
• (iv) domestic law provisions that deny a deduction for a payment that is also deductible in
another jurisdiction; and
• (v) where necessary, guidance on co-ordination or tie-breaker rules if more than one country
seeks to apply such rules to a transaction or structure.
Special attention should be given to the interaction between possible changes to domestic law and the
provisions of the OECD Model Tax Convention. This work will be co-ordinated with the work on interest
expense deduction limitations, the work on CFC rules, and the work on treaty shopping.
85
ACTION 2
Neutralise the effects of hybrid mismatch arrangements
• Expected output:
– Changes to the Model Tax Convention
– Recommendations regarding the design of domestic rules
• Deadline:
– September 2014
86
ACTION 3
Strengthen CFC rules
• CFC and other antideferral rules have been introduced in many countries to
address routing income of a resident enterprise through the non-resident
affiliate.
• However, the CFC rules of many countries do not always counter BEPS in a
comprehensive manner. While CFC rules in principle lead to inclusions in the
residence country of the ultimate parent, they also have positive spillover
effects in source countries because taxpayers have no (or much less of an)
incentive to shift profits into a third, low-tax jurisdiction
• Develop recommendations regarding the design of controlled foreign company
rules. This work will be co-ordinated with other work as necessary
• Expected output: Recommendations regarding the design of
domestic rules.
• Deadline: September 2015
87
ACTION 4
Limit base erosion via interest deductions and
other financial payments
• The deductibility of interest expense can give rise to double non-taxation in both
the inbound and outbound investment scenarios.
• From an inbound perspective, the concern regarding interest expense deduction
is primarily with lending from a related entity that benefits from a low-tax
regime, to create excessive interest deductions for the issuer without a
corresponding interest income inclusion by the holder. The result is that the
interest payments are deducted against the taxable profits of the operating
companies while the interest income is taxed favourably or not at all at the level
of the recipient.
• From an outbound perspective, a company may use debt to finance the
production of exempt or deferred income, thereby claiming a current deduction
for interest expense while deferring or exempting the related income. Rules
regarding the deductibility of interest expense therefore should take into
account that the related interest income may not be fully taxed or that the
underlying debt may be used to inappropriately reduce the earnings base of the
issuer or finance deferred or exempt income.
• Related concerns are raised by deductible payments for other financial
transactions, such as financial and performance guarantees, derivatives, and
captive and other insurance arrangements, particularly in the context of transfer
pricing.
88
ACTION 4
Limit base erosion via interest deductions and other financial payments
Develop recommendations regarding best practices in the design of rules to prevent base erosion
through the use of interest expense, for example
• through the use of related-party and third-party debt to achieve excessive
interest deductions or
• to finance the production of exempt or deferred income, and
• other financial payments that are economically equivalent to interest
payments.
The work will evaluate the effectiveness of different types of limitations.
In connection with and in support of the foregoing work, transfer
pricing guidance will also be developed regarding the pricing of related
party financial transactions, including financial and performance
guarantees, derivatives (including internal derivatives used in intrabank dealings), and captive and other insurance arrangements. The
work will be co-ordinated with the work on hybrids and CFC rules.
• Expected output:
– Recommendations regarding the design of domestic rules.
– Changes to the TP Guidelines
• Deadline:
– September 2015
89
ACTION 5
Counter harmful tax practices more effectively, taking into account transparency and
substance
Revamp the work on harmful tax practices with a priority on
• improving transparency,
• including compulsory spontaneous exchange on rulings related to
preferential regimes, and
• on requiring substantial activity for any preferential regime.
It will take a holistic approach to evaluate preferential tax regimes in the BEPS
context.
It will engage with non-OECD members on the basis of the existing framework
and consider revisions or additions to the existing framework
• Expected output:
– Finalize review of member country regimes (Sep 2014)
– Strategy to expand participation to non-OECD members (Sep 2015)
– Revision of existing criteria (Dec 2015)
90
ACTION 6
Prevent treaty abuse
• Current rules work well in many cases, but they need to be adapted to prevent BEPS that
results from the interactions among more than two countries and to fully account for
global value chains.
• The interposition of third countries in the bilateral framework established by treaty
partners has led to the development of schemes such as
• low-taxed branches of a foreign company,
• conduit companies, and
• the artificial shifting of income through transfer pricing arrangements.
FDI figures show the magnitude of the use of certain regimes to channel investments and
intra-group financing from one country to another through conduit structures.
In order to preserve the intended effects of bilateral relationships, the rules must be
modified to address the use of multiple layers of legal entities inserted between the
residence country and the source country
• Existing domestic and international tax rules should be modified in order to more closely
align the allocation of income with the economic activity that generates that income
91
ACTION 7
Prevent the artificial avoidance of PE status
• In many countries, the interpretation of the treaty rules on agency-PE allows
contracts for the sale of goods belonging to a foreign enterprise to be negotiated and
concluded in a country by the sales force of a local subsidiary of that foreign
enterprise without the profits from these sales being taxable to the same extent as
they would be if the sales were made by a distributor.
• In many cases, this has led enterprises to replace arrangements under which the
local subsidiary traditionally acted as a distributor by “commissionnaire
arrangements” with a resulting shift of profits out of the country where the sales
take place without a substantive change in the functions performed in that country.
• Develop changes to the definition of PE to prevent the artificial avoidance of PE
status in relation to BEPS, including through the use of commissionaire arrangements
and the specific activity exemptions. Work on these issues will also address related
profit attribution issues.
• Expected output: Changes in the Model Tax Convention
• Deadline: Sep 2015
92
ACTION 8, 9 and 10
Assure that transfer pricing outcomes are in line with value creation
• In some instances, multinationals have been able to use and/or misapply
arm’s length principle to separate income from the economic activities that
produce that income and to shift it into low-tax environments.
• This most often results from
• transfers of intangibles and other mobile assets for less than
full value,
• the over-capitalisation of lowly taxed group companies and
• contractual allocations of risk to low-tax environments in
transactions that would be unlikely to occur between
unrelated parties
• Rather than seeking to replace the current transfer pricing system, the best
course is to directly address the flaws in the current system, in particular
with respect to returns related to intangible assets, risk and overcapitalisation. Nevertheless, special measures, either within or beyond the
arm’s length principle, may be required
93
ACTION 8, 9 and 10
Assure that transfer pricing outcomes are in line with value creation
Action 8 – Intangibles
• Develop rules to prevent BEPS by moving intangibles among group members. This will
involve:
(i) adopting a broad and clearly delineated definition of intangibles;
(ii) ensuring that profits associated with the transfer and use of intangibles are
appropriately allocated in accordance with (rather than divorced from) value
creation;
(iii) developing transfer pricing rules or special measures for transfers of hard-tovalue intangibles; and
(iv) updating the guidance on cost contribution arrangements.
Action 9 – Risks and capital
• Develop rules to prevent BEPS by transferring risks among, or allocating excessive capital
to, group members.
• This will involve adopting transfer pricing rules or special measures to ensure that
inappropriate returns will not accrue to an entity solely because it has contractually
assumed risks or has provided capital.
• The rules to be developed will also require alignment of returns with value creation.
• This work will be co-ordinated with the work on interest expense deductions and other
financial payments.
94
ACTION 8, 9 and 10
Assure that transfer pricing outcomes are in line with value creation
Action 10 – Other high-risk transactions
• Develop rules to prevent BEPS by engaging in transactions which would not, or would
only very rarely, occur between third parties.
• This will involve adopting transfer pricing rules or special measures to:
(i) clarify the circumstance in which transactions can be recharacterised;
(ii) clarify the application of transfer pricing methods, in particular profit
splits, in the context of global value chains; and
(iii) provide protection against common types of base eroding payments, such
as management fees and head office expenses.
• Expected output: Changes to the Transfer Pricing Guidelines and possibly to the
Model Tax Convention
• Deadline: Sep 2015
95
ACTION 11
Establish methodologies to collect and analyse data on BEPS and the actions to address it
• Transparency, certaintay and predictability
• Data collection on BEPS should be improved. Taxpayers should disclose
more targeted information about their tax planning strategies, and transfer
pricing documentation requirements should be less burdensome and more
targeted
• There are several studies and data indicating that there is an increased
disconnect between the location where value creating activities and
investment take place and the location where profits are reported for tax
purposes
• Therefore, the objective is to develop techniques, which look at measures
of the allocation of income across jurisdictions relative to measures of
value creating activities
96
ACTION 11
Establish methodologies to collect and analyse data on BEPS and the actions to address it
• Develop recommendations regarding indicators of the scale and economic
impact of BEPS and ensure that tools are available to monitor and evaluate the
effectiveness and economic impact of the actions taken to address BEPS on an
ongoing basis.
• This will involve developing an economic analysis of the scale and impact of BEPS
(including spillover effects across countries) and actions to address it.
• The work will also involve assessing a range of existing data sources, identifying
new types of data that should be collected, and developing methodologies based
on both aggregate (e.g. FDI and balance of payments data) and micro-level data
(e.g. from financial statements and tax returns), taking into consideration the
need to respect taxpayer confidentiality and the administrative costs for tax
administrations and businesses
• Expected output: Recommendations regarding the data to be
collected and methodologies to analyse them
• Deadline: Sep 2015
97
ACTION 12
Require taxpayers to disclose their aggresive tax planning arrangements
• Comprehensive and relevant information on tax planning strategies is often unavailable
to tax administrations. Yet the availability of timely, targeted and comprehensive
information is essential to enable governments to quickly identify risk areas
• Develop recommendations regarding the design of mandatory disclosure rules for
aggressive or abusive transactions, arrangements, or structures, taking into consideration
the administrative costs for tax administrations and businesses and drawing on
experiences of the increasing number of countries that have such rules.
• The work will use a modular design allowing for maximum consistency but allowing for
country specific needs and risks.
• One focus will be international tax schemes, where the work will explore using a wide
definition of “tax benefit” in order to capture such transactions. The work will be coordinated with the work on co-operative compliance. It will also involve designing and
putting in place enhanced models of information sharing for international tax schemes
between tax administrations.
• Expected output: Recommendations regarding the data to be collected and
methodologies to analyse them
• Deadline: Sep 2015
98
ACTION 13
Re-examine transfer pricing documentation
• In many countries, tax administrations have little capability of developing a “big
picture” view of a taxpayer’s global value chain.
• In this respect, it is important that adequate information about the relevant
functions performed by other members of the MNE group in respect of intra-group
services and other transactions is made available to the tax administration
• Develop rules regarding transfer pricing documentation to enhance transparency for
tax administration, taking into consideration the compliance costs for business.
•The rules to be developed will include a requirement that MNE’s provide all relevant
governments with needed information on their global allocation of the
income, economic activity and taxes paid among countries according to a common
template
• Expected output: Changes to Transfer Pricing Guidelines and Recommendations
regarding the design of domestic rules
• Deadline: Sep 2014
99
ACTION 14
Make dispute resolution mechanisms more effective
• Ensure certainty and predictability for business
• Improve the effectiveness of the mutual agreement procedure (MAP). For
this purposes, it will be supplemented the existing MAP provisions in tax
treaties with a mandatory and binding arbitration provision
• Develop solutions to address obstacles that prevent countries from solving
treaty-related disputes under MAP, including the absence of arbitration
provisions in most treaties and the fact that access to MAP and arbitration
may be denied in certain cases.
• Expected output: Changes to Model Tax Convention
• Deadline: Sep 2015
100
ACTION 15
Develop a multilateral instrument
Expected output:
•
•
Report identifying relevant public international law
and tax issues (Sep 2014)
Develop a multilateral instrument (Dec 2015)
• Some actions will likely result in
• recommendations regarding domestic law provisions,
• changes to the Commentary to the OECD Model Tax Convention
• Transfer Pricing Guidelines.
• changes to the OECD Model Tax Convention. This is for example the case for the
introduction of
– an anti-treaty abuse provision,
–changes to the definition of permanent establishment,
–changes to transfer pricing provisions and
–the introduction of treaty provisions in relation to hybrid mismatch
arrangements
• A multilateral instrument to amend bilateral treaties is a promising way forward in this
respect
• Analyse the tax and public international law issues related to the development of a
multilateral instrument to enable jurisdictions that wish to do so to implement measures
developed in the course of the work on BEPS and amend bilateral tax treaties.
•On the basis of this analysis, interested Parties will develop a multilateral instrument
designed to provide an innovative approach to international tax matters, reflecting the
rapidly evolving nature of the global economy and the need to adapt quickly to this
evolution.
101
TAX PLANNING, TAX
AVOIDANCE, AND TAX EVASION
General Concepts
Tax Evasion, Tax Avoidance, Tax Planning
 Tax Avoidance vs Tax Evasion
 Practically, it is unclear definiton and sometimes very
depend on the tax authority interpretation. It seems as a
nuance that need to be scrutinized into details.
 There are some approaches to tax evasion concept:
1. Economic approach
2. Legal approach
3. Political approach
4. Philosophical approach
• Many literatures and experts usually use economic/legal
approach and just to calculate the loss of revenue and
penalties.
103
Tax Evasion
• the efforts by taxpayers to mitigate taxes by illegal means. What can be
defined as legal or illegal depends on the national laws.
• the taxpayer avoids the payment of tax without avoiding the tax liability, so
that he escapes the payment of tax that is unquestionably due according to
the law of the taxing jurisdiction and even breaks the letter of the law.
(Russo et. al, 2007)
• An intention to avoid payment of tax where there is actual knowledge of
liability. It usually involves deliberate concealment of the facts from the
revenue authorities, and is illegal. (Rohatgi: 2007).
• There is a correlation but still seems ambiguious that legal tax avoidance
can push the public motive to evade the tax obligation (Neck and
Schneider, 2011).
• Philosophically, tax evasion also correlate with any other aspects of sociopolitical dimension (McGee,2007).
104
Some common example of tax evasion
• The failure by a taxable person to notify the tax authorities of his presence or
activities in the country if he is carrying on taxable activities.
• The failure to report the full amount of taxable income.
• The deduction claims for expenses that have not been incurred, or which
exceed the amounts that have been incurred.
• Falsely claiming relief that is not due.
• The failure to pay over to the tax authorities the tax properly due.
• The departure from a country leaving taxes unpaid with no intention to paying
them.
• The failure to report items or sources of taxable income, profit or gains, where
there is either a general obligation in the law to volunteer such information.
105
Tax Avoidance
• Tax avoidance is not tax evasion. Many have to try
to formulate an exact definition but still unclear
enough.
• The art of dodging tax without breaking the law
(Justice Reddy, McDowell & Co vs CTO, 1985)
• The minimisation of one’s tax liability by taking
advantage of legally available tax planning
opportunities. (Black’s Law Dictionary).
• An arrangement of a taxpayer’s affairs that is
intended to reduce his liability and that although
the arrangement could be strickly legal is usually in
contradiction with the intent of the law it purports
to follow. (OECD).
106
What OECD said
 OECD just provides three elements of tax
avoidance:
(1) almost invariably there is present an element of
artificially to it or, to put this another way, the
various arrangements in a scheme do not have
business or economic aims as their primary purpose’
(2) secrecy may also be a feature of modern
avoidance: and
(3) Tax avoidance often takes advantage of
loopholes in
the law or of applying legal provisions,
for purposes
for which they were not intended.
 OECD Model (2000)  the prevention of tax
avoidance is one of the purposes of double tax
treaties.
107
Tax Planning
• Many countries make a distinction between
acceptable tax avoidance and unacceptable tax
avoidance.
• Unacceptable TA is achieved by transactions that
are genuine and legal but involve deceit or
pretence or sham tax structures. (Lord
Goff, Rohatgi:2007)
• Contrary, Acceptable TA (tax planning) reduces
the tax liability through the movement (or nonmovement) of persons, transactions or funds, or
other activities that are intended by legislation 
also called tax mitigation.
108
Categorizing Tax Planning
Illegal
Transaction
Tax Evasion
(Tax Fraud)
Tax Avoidance
(Fraus Legis)
Legal
Tax Planning
109
Skema International Tax Planning
Sumber: PriceWaterhouse Coopers, 2007.
Google Double Irish / Dutch Sandwich II - 2009
Google
(Pre-IPO)
$
Capital
Cost
$
Sharing
Agreement Buy-In
Google Ireland Holdings
Search + Advertising
Technology –
Europe, Middle East &
Africa
Google Double Irish / Dutch Sandwich II - 2009
Google
(Pre-IPO)
Sharing Cost
Agreement
Google Irelend Holdings
Search + Advertising Technology Europe. Middle East &
Africa
Ireland
European
Affiliates &
Customers
Bermuda
$$$
$$
Royalties
License of Technology
Google Netherlands BV
(No Employees)
Middle East
Affiliates &
Customers
Africa
Affiliates &
Customers
$$
Royalties
$ Fees
($ Bilion Revenue 2009)
Google Ireland Ltd
2000 Employees
Sub-License of
Technology
Apple’s Scheme
Apple Inc.
(United States)
Apple
Operations
International
APPLE’S OFFSHORE SUBSIDIARIES
Apple Retail
Holding Europe
(Ireland)
Apple Retail Belgium
Apple Retail France
Apple Retail Germany
Apple Retail Italia
Apple Retail
Netherlands
Apple Retail Spain
Apple Retail
Switzerland
Apple Retail UK
Apple
Distribution
International
(Ireland)
Apple Singapore
(Singapore)
Apple Asia
In-country
distributors
Apple
Operations
Europe
Apple Sales
International
Country of
Incorporation and Tax
Residence
These 3 subsidiaries are incorporated
in Ireland, but have no country of
tax residence
100 percent owned by Apple
Inc., company that receivesthis is
a holding dividends from most of
Apple’s offshore affiliates. It has
no physical presence and has
never had any employees.
A subsidiary of Apple Operations
International, it had about 400
employees
in
2012,
and
manufactured a line of specialty
computers for sale in Europe.
Contracted
with
third-party
manufacturers in China to make
Apple products which it then sold to
Apple Distribution International. Paid
little or no tax on $74 billion in profit
made from 2009 to 2012.
Apple’s Scheme - Continued
Global Taxes Paid by ASI (Apple Sales International), 2009-2011
2011
2010
2009
Total
$ 38 billion
Pre-Tax
Earning
$ 22 billion
$ 12 billion
$ 4 billion
Global Tax
$ 10 million
$ 7 million
$ 4 million $ 21 million
Tax Rate
0.05%
0.06%
0.1%
0.06%
Foreign Base Company Sales Income Tax Avoided Tax Avoided
2011
$ 10 billion
2012
$ 25 billion
Total
$ 35 billion
$ 3.5 billion $ 10 billion
$ 9 billion
$ 25 billion
$ 12.5 billion $ 17 billion
Vodafone’s Scheme
HK Shareholder
Cayman Co 1
(Cayman Island)
Cayman Co 2
(Cayman Island)
Maritius Co
(Maritius)
Hutchison Essar
(India)
Vodafone UK
Sold
Cayman Co
2 shares
Vodafone Dutch
Marks & Spencer Case
No Consolidation
Joint Taxation
MARKS &
SPENCER
Subsidiaries are
independent
llegal and fiscal
entities (separate)
UK
Company
UK
Branch
Intermediary
Netherlands
subsidiary
Belgium
Netherlands
subsidiary
France
subsidiary
Germany
subsidiary
subsidiary
Belgium
France
subsidiary
Germany
STARBUCKS’S SCHEME
Starbucks Coffee Inti (USA)
Rain City
Dutch
Partnership
Enterald
Dutch
Partnership
Royalty
Royalty
ALKI LP
UK
Royalty
Starbucks Holding BV
(Netherland)
Starbucks Trading (Swiss)
Starbucks UK
Starbucks Mfg BV
(Netherland)
Skema Anti Penghindaran Pajak
(Anti Tax Avoidance)
Pengaturan CFC Rule di
Indonesia
PT A
Tuan B
INDONESIA
40%
Q
X Ltd.
Laba setelah Pajak 2012
Rp.1.000.000.000,00
40%
Pembiayaan dengan Saham
DIVIDEN
Perusahaan Induk
Laba Operasional 100
Negara A
Saham
Negara B
1000
Anak Perusahaan
Laba Operasional 50
Pembiayaan dengan Kombinasi Utang dan Saham
Perusahaan Induk
Laba Operasional 100
Penghasilan Bunga 40
140
Bunga
5%
Dividen
Negara A
Saham
Negara B
200
Anak Perusahaan
Laba Operasional
50
Biaya Bunga
40
10
Utang
800
Skema Interest Stripping
X Ltd.
Negara A
25%
Utang
(hubungan 1000
istimewa)
Indonesia
PT Y
Remunerasi
10% laba tanpa
batas waktu
Conduit Company sebagai Bentukan PT A
Y Co.
Negara B
P3B negara A dan
negara B :
100 %
Tarif PPh
Dividen 0%
P3B negara B dan
Indonesia :
Z Co.
100 %
Negara A
P3B negara A dan
Indonesia :
Tarif PPh
Dividen : 10%
Indonesia
PT X
Tarif PPh
Dividen 15%
Tanpa Conduit Company Rule I
Z Co.
Negara A
100 %
Indonesia
Dividen
PPh 10%
PT X
Dengan Conduit Company Rule I
Y Co.
Negara B
100 %
Indonesia
PT X
Dividen
PPh 15%
Skema Conduit Company Rule II
Y Co.
Negara B
100 %
X Ltd.
95 %
Negara A
Indonesia
PT X
Tanpa Conduit Company Rule II
Y Co.
Negara B
100 %
Negara A
Penjualan 100% saham
X Ltd. Ke PT Z
PT Z
PT X
Dengan Conduit Company Rule II
Y Co.
Negara B
100 %
Negara A
PT X
Penjualan 100% saham
X Ltd. Ke PT Z
PT Z
Skema International Hiring-Out of Labor
X Ltd.
(user)
e
25%
(hubungan
istimewa)
Melakukan pekerjaan
di negara A
Negara A
Indonesia
PT A
(hirer)
e
Skema Hubungan Istimewa di Indonesia
PT A
25%
50%
PT B
25%
50%
PT C
PT D