An Indonesian Perspective on Global Tax Reform and Pillar 2

This policy brief is aimed at the decision-makers in the Ministry of Finance of Indonesia which seeks the best policy response to the global minimum tax agreed by 137 countries on the 8th October 2021 (Global Base Erosion Rule (GloBE) – also known as the Pillar Two Proposal). It explores how the Indonesian government should respond to the Global Base Erosion Rules which are expected to come into force globally in 2023. The report provides several recommendations, including: 1. Adopt a Domestic Minimum Tax to protect domestic tax revenue; 2. Adopt Pillar Two Rules to capture top-up tax from another country;3. Restructure investment policy to fits the global minimum tax landscape;4. Simplify the GloBE reporting system;5. Amplify behavioral insights with advanced analytics for ease of administration;6. Adopt the Multilateral Cooperative Compliance Framework for the GloBE Rules; and7. Strengthen international collaboration and capacity building