Automatic Exchange of Information to Commence by September 2017

TEMPO.CO, Jakarta - Finance ministers and central bank governors of the G-20 member states have agreed to implement the automatic exchange of information and address base erosion and profit shifting (BEPS) by September 2017 or at least by September next year.

Indonesian Finance Minister Sri Mulyani said that Indonesia has agreed to cooperate with other countries to address tax avoidance through the exchange of information. The proceeds of tax amnesty program show that taxpayers have been stashing their assets and failing to declare them.

“The agreement on the exchange of information is key to achieving fair tax regulations and implementation among nations,” Sri said in a press release received by Tempo on Sunday, March 19, 2017.

Minister Sri attended the two-day meeting of finance ministers and central bank governors of the G-20 countries in France last week. At the meeting, she said that repatriated assets in the tax amnesty program have been rather small compared to the total assets declared. Accordingly, she has urged the G-20 member states to prepare themselves for the implementation of the automatic exchange of information.

Going forward, taxpayers will not be able to exploit mismatches in tax rules adopted in different countries to circumvent the exchange of information. Moreover, the agreement is also aimed at preventing fraud in international trade.

Sri Mulyani reiterated that digital economy firms shall fulfill their liabilities in their host country. “Digital economy tax liability must be fair and the lion share of it must be enjoyed by the country in which transactions are conducted, not where the company is registered,” she said.

The G-20 member states finance ministers have also agreed to avoid competitive devaluation of currencies. The meeting also highlights cross-border capital flow that threatens financial market stability.

PUTRI ADITYOWATI