Tax Briefing Series No. 2

BEPS 2.0 and Minimum Standards


  1. How are the latest developments in the G20 negotiations on BEPS 2.0?

OECD Secretary General Report 2022

On 9 February 2022, the OECD Secretary-General delivered a tax report to the G20 Finance Ministers and Central Bank Governors ahead of their 17-18 February meeting under the 2022 Indonesian Presidency. The report provides an update on the ongoing activity with respect to the BEPS minimum standards on the taxation of multinationals:

  • BEPS Action 5 (harmful tax practices): 131 Inclusive Framework jurisdictions have been subject to peer reviews on the exchange of tax rulings, as a result of which 95 jurisdictions have been found to be in full compliance with the standard and 36 jurisdictions have received recommendations for improving their legal or operational framework on exchange of tax rulings.10
  • BEPS Action 6 (treaty abuse): The Inclusive Framework has approved a peer review report, which has not been published yet, that shows that the level of compliance with the minimum standard on treaty shopping has more than doubled since last year, with about 2,300 of the 2,400 tax treaties concluded between Inclusive Framework jurisdictions expected to become compliant with the minimum standard in the near future.
  • BEPS Action 13 (transfer pricing documentation): The peer review results released in October 2021 on the implementation of the country-by-country reporting (CbCR) minimum standard show that over 100 Inclusive Framework jurisdictions have introduced CbCR legislation to impose a filing obligation.11
  • BEPS Action 14 (dispute resolution): The OECD has released updated statistics on Mutual Agreement Procedures (MAP)12 and the Stage 2 peer review reports on implementation of the minimum standard for MAP for the seventh13 and eighth14 batches of jurisdictions.

In addition, the report notes that the coverage of the BEPS Multilateral Instrument has expanded to 99 jurisdictions and about 1,850 bilateral tax treaties. Finally, the OECD released the latest version of the OECD Transfer Pricing Guidelines in January 2021.15

G20 communiqué

The communiqué issued at the conclusion of the G20 Finance Ministers and Central Bank Governors meeting on 17-18 February includes the following paragraph on tax matters:

To ensure the swift global implementation of the historic OECD/G20 two-pillar international tax package agreed in 2021, we commit to develop the model rules and multilateral instruments according to the timetable provided in the Detailed Implementation Plan, with a view to ensure that the new rules will come into effect at global level in 2023. We welcome the technical design of the Global anti-base erosion Model Rules for Pillar 2 adopted by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), and call for their finalization and consistent implementation at a global level as a common approach. We also welcome the ongoing development of the Multilateral Convention for Pillar 1. Bespoke technical assistance will be available to developing countries to support all aspects of implementation. We support the global and regional efforts, including in the Asia-Pacific region, to improve domestic resource mobilization in developing countries through technical assistance and capacity building and welcome the G20 Ministerial Symposium to discuss these issues. We support the progress made on the work on the framework for the automatic exchange of information on crypto-assets. We acknowledge the OECD/G20 Inclusive Framework on BEPS report on Tax Policy and Gender Equality.

Model Rules and Commentary on Pillar 2

The OECD published commentary on Pillar 2 on March 14, 2022. Commentary was published to create interpretations of the Pillar 2 model rules by both tax authorities and by multinational corporations.

Regarding the subject to tax rules (STTR) provisions contained in Pillar 2, the Organization for Economic Co-operation and Development (OECD) has not yet issued a multilateral instrument (MLI) on the STTR. When the MLI has been issued, the MLI will be immediately adopted by each Inclusive Framework member jurisdiction to amend some of the clauses in the double taxation avoidance agreement (P3B).


  1. what is the current position and arrangement of the BEPS 2.0 by Indonesia?

Pillar 1. Unified approach

Pillar One requires each country to cancel unilateral digital tax policies, such as the digital services tax. From the regulatory aspect, with the approval of Pillar I of the OECD, it means that Law No. 2/2020 which regulates taxation for trading through the electronic system (PMSE), is no longer relevant. Currently through PMK No. 60/2022, the Ministry of Finance re-regulates the provision of value added tax (PPN) on the use of intangible taxable goods (BKP) and/or taxable services (JKP) from abroad through trading through the electronic system (PMSE).

Pillar 2. GloBE

Following the finalisation of Model Rules and commentary, jurisdiction member of Infclusive Framework including Indonesia able to start to prepare and develop its domestic regulation. According to the Director of International Taxation at the Directorate General of Taxes (DJP), Mekar Satria Utama, the government regulation (PP) that adopted Pillar 2 will be finalized in the near future. In term of statury aspect, GloBE has been stated in Article 32A of the Income Tax Law up to the HPP Law.  However, government regulation and Finance Ministry Regulation are still in development.


  1. What are the demands and recommendations of global civil society?

Civil Society’s respond to BEPS Action 2.0

While this is considered unsatisfactory, some who represent an optimistic view point to the ease for developing countries and market jurisdictions to levy taxes on the income earned by digital companies. Taxing rights for market jurisdictions on residual profits earned by multinational digital companies is considered a step forward.

Some are skeptical. This refers to the minimum or less than maximum tax revenue that will be received by developing countries due to the high revenue threshold in pillar 1 and the minimal portion of profits distributed to market jurisdictions. The number of multinational companies covered by Pillar One is limited. Apart from that, only multinational companies with revenues above EUR20 billion and profitability above 10% are covered in Pillar 1. Under these provisions, it is estimated that around 100 multinational companies are covered and only 25% of the residual profit is entitled to be taxed by market jurisdictions.



  • The G20 forum has to re-discuss the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting and propose a minimum global minimum tax rate 25%.
  • Encourage the development of a working group under the United Nations Tax Committee which looks at global tax issues while fully considering the economic context of developing countries and least developed countries, including an Ombudsman for countries to address their grievances under digital economy. Moreover, this working group should have its representatives from both developing countries and least developed countries to ensure equity.
  • Introducing wealth tax concept as an alternative to raise more tax revenue and redistribute wealth from high wealth individuals to the people in need.