DDTC as OECD’s Reference for the Preparation of the BEPS MLI Database

The MLI aims to reduce the risk of double taxation and prevent tax avoidance, offering an efficient solution in addressing global challenges related to tax avoidance.

Publicly accessible through oecd.org, the BEPS MLI matching database allows the tax authority in each jurisdiction and other stakeholders to project how the BEPS MLI modifies a particular tax treaty.

Interestingly, for all MLIs ratified by Indonesia, the OECD uses regulatory documents uploaded by Perpajakan DDTC. This contrasts with other jurisdictions, where the OECD chooses to use regulatory documents uploaded by the official government website.

For instance, the comparison between the MLI between Indonesia and Australia. The documents presented by the OECD indicate that Indonesia has proven its commitment by signing the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI) on 7 June 2017, which later came into force on 1 August 2020.

Meanwhile, the tax treaty between Indonesia and Australia has been effective from 1 July 1993.

To view details of the MLI provisions for the Indonesia-Australia tax treaty, users can click on the regulatory documents for each country. In the Indonesian section, the documents provided by the OECD are the Tax Treaty, which has been repackaged and uploaded by Perpajakan DDTC.

For readers’ convenience, Perpajakan DDTC presents the articles added through the MLI pursuant to the director general of taxes circular letter officially issued by the authority, i.e., SE-05/PJ/2021.

On the other hand, in the Australian section, the regulatory documents displayed are those uploaded by the official website of the Australian Tax Office (ATO), the Australian tax authority.

On a related note, the BEPS MLI database has been provided by the OECD since 2017, with the latest version released in June 2023. In particular, the OECD’s database features aggregate statistics on the impact of BEPS MLI and specific matching results under BEPS MLI.

Indonesia's commitment to signing the MLI with a wide array of jurisdictions signifies its active role in maintaining global tax stability. To implement the MLI, the government has ratified Pres. Reg. 77/2019 as amended by Pres. Reg. 63/2024.

This ratification is complemented by reservations and notifications aligned with national interests and domestic law.

Pursuant to Pres. Reg. 63/2024, Indonesia confirms that sixty tax treaty partners have agreed to implement the multilateral convention. This amendment aims to accommodate more relevant provisions, such as hybrid mismatches, treaty abuses, avoidance of permanent establishment status and improved dispute resolution mechanisms.

Complete information on the implementation of the MLI under the tax treaties between Indonesia and tax treaty partners can be accessed through the P3B Perpajakan DDTC channel. By activating the MLI button, users can comprehensively view the MLI provisions and the underlying legal basis. (sap)