In this G20, the finance ministers will see each other on how we can recover the state budgets, so there will be an agreement on global taxationJakarta (ANTARA) - Global minimum taxation is part of global efforts to revamp state budgets that have been heavily impacted by the COVID-19 crisis, Minister of Finance Sri Mulyani Indrawati has said.
"In this G20, the finance ministers will see each other on how we can recover the state budgets, so there will be an agreement on global taxation," Indrawati remarked at the CNBC Economic Outlook 2022 here on Tuesday.
According to Indrawati, all finance ministers in the world are currently striving to freshen up state budgets that have essentially supported the needs of the community during the pandemic.
One way to restore state budgets is a global minimum tax regulation that aims to protect the taxation rights of each jurisdiction from the practice of Base Erosion and Profit Shifting (BEPS), Indrawati said.
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Many large companies decide to shift to a country with lower taxes to avoid paying higher taxes in other countries, she added.
"It is not fair if they can play ‘hide and seek.’ Hence, the global minimum taxation exists to prevent taxpayers from moving to countries with lower taxes," the finance minister explained.
According to Indrawati, tax evasions are detrimental to state revenues considering that countries also have a responsibility to build infrastructure, maintain security, and establish health and educational institutions for their people.
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"State revenues decreasing because of tax evasions is unfair. So that one of the achievements of the G20 is the global taxation agreement," she pointed out.
In Indonesia, the government is trying to bolster tax revenue through tax reform, Indrawati said.
The tax reforms are being carried out through the Tax Regulation Harmonization Law (UU HPP) that covers income tax, Value Added Tax (VAT), to carbon tax to ensure that Indonesia has a stronger fiscal foundation, she pointed out.
"This purpose is not for one period, this is forever. Indonesia can only develop into a prosperous and just country if its state budget is healthy," Indrawati explained.
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Translator: Astrid H, Kenzu T
Editor: Fardah Assegaf
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