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Jakarta, Ideatax -- The Coordinating Minister for the Economy, Airlangga Hartarto, reported that Indonesia will officially become a member of the Organization for Economic Co-operation and Development (OECD) (Detik Finance, 2024). Furthermore, Airlangga mentioned that Indonesia is the only ASEAN country as well as the third country in Asia after Japan and Korea to be OECD members.
The OECD is a world economic development and cooperation organization founded in France in 1948. The establishment of the OECD is to form policies that promote prosperity, equality, opportunity, and welfare for all parties. At first, the OECD only consisted of European countries called OEEC (Organization for European Economic Co-operation). OEEC was formed as part of the Marshal Plan implementation for the reconstruction of European countries after the Second World War. Along with economic development, OEEC countries expanded to non-European countries, and in 1961, OEEC was transformed into the OECD.
Currently, 38 countries are members of the OECD, ranging from Asia to Europe (Detik Edu, 2023). Therefore, Indonesia will become the 39th country when it officially becomes a member of the OECD. Some of the OECD member countries that have previously participated are Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States (Bisnis Indonesia, 2023).
One focus of the OECD is related to taxation. The OECD has published various analyses, reports, and recommendations related to taxation both domestically and internationally. It is important to know that the OECD has made essential contributions to the policy development of countries worldwide. The OECD has also become a trendsetter in the tax policies development in Indonesia and other countries though Indonesia was not part of the OECD before (BKF, 2015).
One of the tax policies in Indonesia adopted from the OECD study is related to the Transfer Pricing Guidelines that refer to the Base Erosion and Profit Shifting (BEPS) Action Plan. In addition, there are Mutual Agreement Procedures (MAP), Advance Pricing Agreements (APA), and Automatic Exchange of Information (AEoI) policies that more or less refer to OECD studies and reviews. Indonesia's joining as a member of the OECD will be a new chapter in tax policy in Indonesia. This is because the OECD will not only provide technical support in economic and taxation policies but also in expanding the network of Indonesian taxation authorities.
However, there is something that needs to be considered. If Indonesia has officially become an OECD member, then all forms of Indonesian policy must align with OECD policies. As is known, several Indonesian tax policies are at odds with the rules released by the world's economic institutions. For example, in preparing a tax treaty, Indonesia generally refers to the United Nations Model (UN Model) rather than the OECD Model. Indonesia adheres to the UN model because, in general, the tax treaty provisions in the UN model favor developing countries compared to developed countries (UN, 2024). The partiality of the UN model toward developing countries can be seen in the articles that provide greater taxation rights to source countries compared to residence countries.
Therefore, if Indonesia becomes part of the OECD, the government will most likely change the provisions in the tax treaty from the UN model to the OECD model. It is known that until 2022, Indonesia will have tax treaties with 71 countries.
References
Bisnis Indonesia. (2023, September 23). Daftar Negara Anggota OECD vs BRICS, Jokowi Pilih Mana? Retrieved from Bisnis Indonesia: https://ekonomi.bisnis.com/read/20230917/9/1695669/daftar-negara-anggota-oecd-vs-brics-jokowi-pilih-mana
BKF. (2015, Desember 15). Pemetaan Kerja Sama RI - OECD. Retrieved from BKF: https://fiskal.kemenkeu.go.id/kajian/2015/12/29/150104299718522-pemetaan-kerja-sama-ri-oecd
Detik Edu. (2023, Agustus 13). 38 Negara OECD yang Memiliki Ekonomi Tinggi, Indonesia akan Bergabung? Retrieved from Detik Edu: https://www.detik.com/edu/detikpedia/d-6880357/38-negara-oecd-yang-memiliki-ekonomi-tinggi-indonesia-akan-bergabung
Detik Finance. (2024, Feb 22). Cetak Sejarah! Indonesia Resmi Jadi Anggota OECD. Retrieved from Detik Finance: https://finance.detik.com/berita-ekonomi-bisnis/d-7205496/cetak-sejarah-indonesia-resmi-jadi-anggota-oecd
UN. (2024, Jan 24). United Nations Model Double Taxation Convention between Developed and Developing Countries. Retrieved from United Nations: https://un.org/esa/ffd/tax-committee/ta-unmodel.html#:~:text=The%20United%20Nations%20Model%20Convention%20tends%20to%20be%20relied%20upon,and%20OECD%20Member%20country%20practice.
