Great discussion on the future of Pillar 2 for Indonesia
Politeknik Keuangan Negara STAN and The Capabuild Foundation want to thank an amazing audience and our outstanding panelists for a lively discussion on the future of Pillar 2 and its impact on Indonesia. The survey feedback was very positive. Pak Mekar Satria Utama set the scene outlining the key features of Pillar 2, joined in the Q and A by Sunita Jogarajan, Christian Kaeser, Arief Budi Wardana, Mercy Mbithi, and Serge De Reus.
The discussion covered:
Impact Assessment: Countries and companies need to conduct impact assessments to understand the revenue implications, economic effects, and necessary administrative adjustments of Pillar 2.
Opportunities and Challenges: Pillar 2 offers opportunities for increased tax revenue and a fairer international tax system. However, it also presents challenges, including administrative complexity, the need to redesign tax incentives, and potential disputes.
Tax Incentives: Traditional tax incentives, like tax holidays, may become less effective under Pillar 2. Countries need to explore alternative tools to attract foreign direct investment (FDI), such as investing in infrastructure, education, and political/legal stability.
Complexity: The complexity of Pillar 2 rules is a major concern for both governments and businesses. Simplification of the rules is desired.
US Opposition: The US’s opposition to Pillar 2 creates uncertainty about its future. The potential for retaliatory measures and the lack of US participation could undermine the effectiveness of the initiative.
Regional Cooperation: Regional cooperation, particularly among low- and middle-income countries, is crucial to address the challenges and maximize the benefits of Pillar 2.
The Subject to Tax Rule (STTR) is seen as a realistic alternative for developing countries to protect their taxing rights.
Dispute Resolution: The lack of a clear dispute resolution mechanism for Pillar 2 is a significant concern.
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