The Department of Tax Law at the Faculty of Law, UGM, held a public lecture on Thursday (15/02/2024). A total of 275 undergraduate students and 18 graduate students attended the public lecture, which was conducted via Zoom Meeting. This public lecture is one of the ways the department supports the Sustainable Development Goals specifically Goal 8 on Decent Work and Economic Growth and Goal 9 on Industry, Innovation, and Infrastructure.
The theme of this event is “Tax Certainty in Foreign Direct Investment in Indonesia: Current Conditions and Future Challenges,” featuring Darussalam, S.E., Ak., CA., M.Si., LL.M. (Int. Tax.), as the speaker. Darussalam is the founder founder of the Danny Darussalam Tax Center (DDTC), who has extensive experience in the field of tax consulting and has authored various books on international taxation. One of his books addresses topics such as transfer pricing and Double Taxation Agreements (P3B). The event was moderated by Taufiq Adiyanto, S.H., LL.M., a lecturer in the Department of Tax Law at the Faculty of Law, UGM.
In this public lecture, Darussalam discussed the need for tax certainty for foreign direct investment in Indonesia. “In my opinion, if I were asked whether I prefer incentives or legal certainty in taxation, my answer would certainly be that tax certainty is far more important than the incentives themselves. This is because investors, as taxpayers, want to be able to plan from the start—they do not like having to pay unexpected costs yang sifatnya surprise in the middle of running their business; no matter how large the costs may be, they want them to be predictable,” he said while explaining the urgency of tax certainty in Indonesia.
Darussalam emphasized that there are six elements in taxation that serve as attractions for investors engaging in foreign direct investment.
First, regarding the tax system. This relates to a country’s tax collection principles. Does it use a worldwide system or territorial system? Or is it a hybrid format as applied in Indonesia through the foreign dividend exemption provided the investment meets certain criteria.
Second, how does Indonesia’s tax system work from the perspective of the relationship between a company and its individual owners? Specifically, this is reflected in tax collection when profits are distributed to shareholders. Are they taxed (classical system) or not taxed at all (one tier system)? When taxed, Darussalam argues that double taxation leading many companies to retain their profits (retained earnings).
Third, regarding the tax rates applied in a country.
Fourth, tax incentives. Although in the Doing Business survey presented by Darussalam, tax incentives ranked only eleventh as a factor in investment competitiveness—with economic and political stability, among others, remaining the primary factors.
Fifth, regarding a country’s network of double taxation treaties (P3B). Darussalam raised an interesting question: do P3B still serve to eliminate double taxation when tax credits are already extensively regulated in the domestic laws of various countries.
Sixth, regarding how countries regulate anti avoidance rule.
Darussalam delivered the guest lecture, interspersed with a question-and-answer session. Students who actively asked questions or were able to answer them received a book written by Darussalam.
Penulis: Regina Ditta
