The island archipelago is a close strategic partner of India in Southeast Asia, and its government is promoting the idea of tax transparency at the next G20 summit it is hosting.
Simultaneously, Jakarta is pushing for FATF membership, ET has learned.
India is also seeking greater fiscal transparency between G20 countries and Prime Minister Narendra Modi himself has championed it at previous summits.
“As holder of the G20 Presidency, Indonesia fully encourages an increase in tax transparency between countries. A fair and transparent international tax system is important to combat tax evasion, prevent transfer pricing and encourage favorable domestic tax policies,” said Maudy Ayunda, Indonesian government spokesperson for the G20 Presidency.
Tax transparency and the exchange of tax information are important to encourage economic growth, especially in the post-Covid-19 recovery period. Tax transparency between countries would only have a massive impact if implemented collectively, she said.
Therefore, international cooperation is needed for the implementation of transparency standards and the exchange of tax information, as well as tax-related law enforcement, which does not just cover one country.
“As part of the activities of the Indonesian G20 Presidency, an Asia Initiative meeting was held on February 16, 2022, with the theme “Sustaining Recovery through Enhanced Tax Transparency”. The Asia Initiative is an initiative launched in November 2021 and endorsed by 11 Asian countries to encourage tax transparency in Asia,” Ayunda said.
The meeting also brought together the Global Forum on Transparency and Exchange of Information for Tax Purposes, heads of tax authorities from 13 Asian countries, members of global forums and several international institutions such as the Asian Development Bank ( AfDB), the World Bank, and the Asian Tax Administration and Research Study Group.
“This shows the seriousness of all parties to encourage tax transparency. Unfortunately, the participation and capacity of Asian countries in multilateral tax transparency efforts has not been evenly distributed. Only 11 countries in Asia have committed to increasing tax transparency by signing the Bali Declaration on July 14, 2022,” she said.
The benefits of tax transparency for Indonesia have also included narrowing the space for tax avoidance activities between countries which encourages taxpayer compliance as well as optimal tax revenue as a source of development finance. In addition, optimal tax revenues make taxation an instrument to stimulate the business and investment climate.
“Optimal tax revenue can also help the government to encourage domestic resource mobilization and build a sustainable recovery and emerge from the implications of the pandemic catastrophe,” Ayunda said.
For her part, the Indonesian Minister of Tourism and Creative Economy, Sandiaga Uno, hopes that preparations for the G20 summit scheduled for November in Bali will be completed in the third or fourth week of October.
“The airport, including the places to welcome delegates from various countries, had been prepared. The VVIP terminal at Ngurah Rai Airport has been revitalized and will be used as a parking lot for G20 senior state officials, and the security of heads of state and guests from various countries will be coordinated with the Indonesian Defense Forces. (TNI) and the National Police (Polri),” he told a weekly press briefing.
The ministry is currently preparing draft G20 Bali guidelines for strengthening communities and MSMEs as agents of tourism transformation – a people-centred recovery to be adopted at the Tourism Ministerial Meeting (TMM) September 26. This was done with an international partner. organizations, in particular the World Tourism Organization (UNWTO).