Page 10 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)

DDTC Working Paper 1717
10

Foreign Direct Investment FDI statistics cover all cross-border stocks and flows between enterprises
(FDI) forming part of the same group, including (i) direct investment (equity or
debt) positions; (ii) direct investment financial flows (equity, reinvestment
of earnings, debt); and (iii) direct investment income flows (dividends,
distributed branch profits, interest). The IMF only reports on FDI positions,
not flows, and the amount of information available from individual countries
differ. The OECD has statistics on FDI positions, income and flows, but there
are currently gaps and inconsistencies.

Trade data Aggregate data on bilateral trade by product can be used to analyze profit
Macro Data Corporate income tax Aggregate tax revenue data is collected by Ministry of Finance, especially
shifting through mispricing.

(CIT) revenue
the Directorate General of Taxes (DGT). This could be of good source in
estimating the aggregate revenue loss representing the magnitude of BEPS
activities. It is usually used to represent the tax base existed in a country or
region.

The main challenge of using this data is to differentiate revenue losses
caused by BEPS from real economic and business decisions. In addition, the
lack of detail and consistency is an important issue for developing countries
and, because BEPS involves cross-border transaction with all countries,
comparable data for both developed and developing countries, is essential.

Customs (trade) data Customs data is a useful force for understanding the mispricing of traded
goods and services. This is an important component for understanding
Micro Data transfer pricing behavior by related parties. As noted in the macro-section,
the service component of trade flows (which includes royalties and other
payments for the use of IP) is likely to be underestimated due to the
underreporting and mispricing of IP.

Company financial This information can be sourced from published financial statements of
information from public/ MNEs, open-access sources such as OpenCorporates, and commercial
proprietary databases databases (e.g. Bureau Van Dijk (Bvd) ORBIS and Amadeus, S&P
Compustat Global Vantage, Bloomberg, Oriana, Osiris, OneSource,
Mergent, Alibaba.com, SPARK, DataGuru.in, Ruslana). Companies (at
least public companies) are typically obliged to publsh financial statements
(consolidated and/or unconsolidated).

Problem with the suitability of this data for BEPS analyses include: different
reporting requirements for accounting and tax purposes, no distinction
between related party and independent party transactions, coverage that is
far from comprehensive, and the heterogeneity of reporting across countries
and companies. Databases that consolidate companies’ balance sheet and
income account data are improving their coverage over time, but still have
weak coverage of developing countries, especially Indonesia.

Company financial This information could be of insightful information to measure tax-
information from motivated profit shifting, but access to such data is usually restricted in
government databases certain government institution and needs long bureaucracy process to
obtain such data.
Tax return CIT information A range of financial and tax information is available to tax authorities as
companies are required to file a tax return. The DGT do not report corporate
tax revenues separately for MNEs and purely domestic companies from tax
returns, and have no systematic data regarding intra-group transactions.

Full access to the detailed micro-level company tax data is generally
restricted to DGT.

Tax audit information Information from audits of tax returns filings, both assessments and
settlements, has been cited as a potential source of information about
BEPS. However, they are not available for tax policy analysis, even on an
aggregated basis.