Page 20 - Working Paper (Measuring BEPS and Its Countermeasures in Indonesia: A Preliminary Research Guide)

DDTC Working Paper 1717
20

to examine the effectiveness of countermeasures. government strategy in monitoring specific rules
Each countermeasure might require different that are needed and also which regulation becomes
research technique, moreover if the related BEPS the loophole exploited by MNEs to artificially shift
practices is directly linked to hybrid mismatch, their profit.
which heavily depends on changes of tax system of
the associated countries. This paper provides introductory guide or
basic principle that could be of consideration in
The mixture between macro and micro approach setting the research plan. Preliminarily, macro-
should be mapped in a way to have constructed approach research is useful to measure the
instruments that could illuminate BEPS behavior magnitude of BEPS in overall. Currently available
that currently is still conundrum. The objective of data that can be used include CIT revenue as the
the explained plot above is first to provide first step basis to measure the government loss due to
in gaining profound knowledge about the spread of BEPS practices. Other variables can be utilized
BEPS among various sectors and to examine the to help distinguishing BEPS practices from usual
diverse behaviors along with the determinants. investment flow. Subsequently, micro-approach
Second, which is also crucial, is to have early research is ideal to narrow the knowledge of BEPS
anticipation about necessary data and actions to behavior, particularly in identifying specific BEPS
be taken to make it feasible, including government scheme or MNEs in certain sector. Research with
institution data and information coordination and this methodology is also favorable to measure the
improving access to data, as explained in section effectiveness of BEPS countermeasures, since each
5.3. of them usually have their own specific purpose.

6. Conclusion More-specific plan is clearly needed to produce
clearer set of research plan. This paper provides
ground clearance as a opening step for policy
The existence of BEPS is convincingly evident,
makers in collecting scattered research with various
but yet to be followed by the knowledge of its
data and methodology that might help developing
magnitude in a specific country, particularly
research methodologies and build a set of research
Indonesia. Empirical literatures so far are yet to
plan that can provide insightful knowledge not only
accurately measure the scale of the practices. The
to provide effective BEPS countermeasures, but
reason is basically three folds. First, substantively,
also to help research methodologies advancement
it is difficult to incorporate all factors incentivizing
into the next stage.
BEPS practices into estimation model. Second,
technically, it becomes problematic in determining
the right sample and appropriate data type to
be used. Third, data provision is still limited in
Indonesia.
From current assessment on data and tools
availability, it is identified that several important
data for research purpose are available, but
not accessible. For instance, information from
corporate tax return, corporate financial report,
tax audit are all available but strongly restricted
with confidentiality protection. If related bodies
who collect those information could reform it into
anonymous information or loose the confidentiality
for restricted research purpose, it would potentially
bring huge contribution to the development of
BEPS and counter-BEPS measurement.

In relation to that, a set of research plan is
thus essential to ensure that the knowledge
development would be built in a structured
framework. It enables government (or external)
researchers to anticipate necessary data that are
currently not available or not accessible. But more
importantly, such plan would contribute to the
formulation process of effective countermeasures
in tackling BEPS. It could potentially support the