Indonesia calls global minimum tax a ‘trick’ by developed nations

Indonesian Minister terms global minimum tax a ‘trick’

Indonesia’s Minister of Investment has dismissed the global minimum tax proposal as a self-serving ‘trick’ being pulled by developed nations.

Speaking at the 55th ASEAN Economic Ministers Meeting held in Indonesia on August 19-20, 2023, Indonesia’s Minister of Investment, Bahlil Lahadalia, said that the global minimum tax proposal is designed to benefit developed countries and needs to be reviewed.

Lahadalia said that the application of global minimum tax rules, as they stand today, will not yield identical results for developed and developing countries. Developed countries must provide room for developing countries to attract investment to achieve overall growth, he added.

“The global minimum tax proposal will benefit only a select group of countries. We don’t want this,” Lahadalia told the attendees.

The global minimum tax rules, proposed by the OECD, ensure large multinational enterprise pay a minimum level of tax on the income arising in each of the jurisdictions where they operate.

More specifically, the tax rules provide for a coordinated system of taxation that imposes a top-up tax on profits arising in a jurisdiction whenever the effective tax rate, determined on a jurisdictional basis, is below the minimum rate set at 15 percent.

Lahadalia said that the global minimum tax rules, if implemented too early, will lead to businesses focussing on investments in their own developed countries and disrupt downstream investments in ASEAN countries.

Lahadalia said that the global minimum tax “is nothing more than a trick by developed countries,” adding that the tax policy will force developing countries to send raw materials to developed countries. 

“We already understand this trick. Don’t assume that we don’t understand anymore,” he told participants.

The Minister said that developing countries need more incentives to attract investment, so the taxing policies of developed countries cannot be applied identically in developing countries.

The meeting was attended by senior government officials from Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, among others.