Finance Minister Warns Exporters to Refrain from Tax Avoidance Schemes
KATADATA – Finance Minister Bambang Brodjonegoro asks exporters to refrain from tax avoidance schemes, especially transfer pricing. Tax avoidance will cause losses to the state because it reduces tax revenues.
“Transfer pricing has constantly reduced our tax revenues. I urge exporters to stop this practice because it is strongly related to export,” Bambang said to exporters during year-end meeting with the Indonesian Central Bank and the Supreme Financial Audit Institution (BPK) at the BI Building, on Tuesday (12/2).
According to him, tax avoidance will benefit companies and other countries. But it will cause losses to the state because it reduces tax revenues.
Transfer pricing is a transfer of revenue from a company in higher tax-rate country to other company under the same group in lower tax-rate country thus reducing total tax burdens of the business group.
The reporting of foreign exchange revenue from export (DHE) will be beneficial to the balance of payment and the rupiah exchange rate. Moreover, reporting could ease monitoring of tax payment. “I expect companies to comply with the reporting and to be a good taxpayer,” he said.
According to him, it would be better if exporters report their export proceeds and if more companies deposit their export proceeds in the banking system.
The minister also warns foreign company to avoid affiliated loans because it will reduce profits and tax. He understands that foreign companies prefer to borrow from foreign lenders because domestic banks charge higher and uncompetitive interest rates. “We understand that it is a corporate act. But from a tax point of view, we don’t like affiliated loans,” he said.
