Page 19 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)

DDTC Working Paper 1717
19

Figure 1. Suggested Path for Set of Researches Plan

BEPS behavior in general

MNEs profit shifting behavior
in certain sectors or industries

What to Profit shifting behavior through
measure? certain schemes (e.g. transfer
Macro approach Micro approach price, debt financing, etc.)
Research Research

BEPS behavior into certain tax
jurisdictions
• Measuring BEPS
magnitude in aggregate
• Identifying factors BEPS behavior in certain
(group of) MNE(s)
influencing the
magnitude
Measuring MNEs behaviors
after BEPS countermeasure
enactment(s) to evaluate the
effectiveness

would potentially create new loopholes and may major determinants. It also gives idea on what kind
create further source of legitimate knowledge of circumstance that would make such practices
by shaping the existing epistemology of fiscal nourished and sustained. Overall, it gives the sense
researchers. 56 of urgency for policy makers to counteract it. These
approach can utilize two kind of data: CIT revenue
Thus, a long-term systematic research plan
and FDI. Doing these research, nonetheless, should
for measuring and monitoring BEPS along with
make extensive technical effort to differentiate
the countermeasures in Indonesia is of crucial
the data movement caused by artificial financial
necessity. The urgency for policy makers is to
practices and real business decision.
be intellectually prepared in anticipating the
evolvement of BEPS schemes and MNEs behavior Built upon the groundwork set by macro-
in the future. Not only that it would help in guiding approach study, micro-approach ones could set
researchers to have link one research with another, a number of measurements that could be made
it also indicate the data requirement that need in way to reinforce each other findings or results.
to be provided in the future. It thus improves the They could start examining the dimensions of
efficiency and prevent data insufficiency when the BEPS magnitude by measuring the scale of semi-
research needs to be conducted. A useful principle elasticities due to the changes of factors providing
describing path for research plan is depicted by incentives and disincentives for MNEs to artificially
Figure 1. shift their profits. Afterwards, the research scope
could be more narrowed into specific BEPS
Having the various currently available methods
behavior in specific context and specific scheme as
reviewed with promising potential innovation
well. The deliberation could be based on necessities
in the future, several preliminary principles that
or presumption on areas where such practices
could be valuable to guide the research plan.
might be heavily concentrated.
Basically, macro-approach research is a good
epitome as a preliminary study before followed These studies then could be used to give
by micro-approach studies. It first confirms the insight in evaluating existing countermeasures
existence of BEPS in the country, then it also gives or making ones. Taking it further, micro approach
general hint about how BEPS reacts against the could be used to monitor the development of
BEPS behavior, particularly on how it behaves
against the countermeasures. In other words,
56. David E. Gray, Doing Research in the Real World (London: SAGE
publications, 2004): 18-20. micro approach gives us advantage when it comes