Proceedings of the 3rd International Conference on Law and Governance (ICLAVE 2019)

Notional Interest Deduction Regime in Belgium: What Indonesia Should Learn to Design the CFC Regulation?

Authors
Russel Butarbutar
Corresponding Author
Russel Butarbutar
Available Online 27 March 2020.
DOI
10.2991/aebmr.k.200321.013How to use a DOI?
Keywords
NID, regimes, Belgium, CFC, Indonesia
Abstract

Notional Interest Deduction (NID) regimes, which were implemented for the first time in Belgium, have provided many results and benefits for Belgium. The introduction of NID strengthens the attractiveness of Belgium as a favorable location for treasury centers and capital-intensive investment in general. While Indonesia as a contracting state in tax treaty also has an interest in the proportion of income from international taxation related to the operations of Belgian companies operating in Indonesia. In this study, it was found that the application of NID regimes has reduced the effective tax rate and allowed companies to strengthen their capital structure with the added benefit of tax-deductible interest costs. However, the existing CFC rules are not enough to ward off the NID Regimes abuses of the MNEs group. Therefore, Indonesia in the formulation of CFC Rules must include all aspects that can limit excessive claims related to the reduction of notional interest on equity, such as limiting dregulouble deduction, acquisition of business operations, contributions or transfers of participation between related parties executed for resulting in a higher notional interest deduction in equity, an internationally coordinated interest rate reduction and royalty reduction, a reverse tax credit, withholding tax on all interest and royalty payments, withholding tax as an anti-tax-avoidance regulation.

Copyright
© 2020, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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Volume Title
Proceedings of the 3rd International Conference on Law and Governance (ICLAVE 2019)
Series
Advances in Economics, Business and Management Research
Publication Date
27 March 2020
ISBN
10.2991/aebmr.k.200321.013
ISSN
2352-5428
DOI
10.2991/aebmr.k.200321.013How to use a DOI?
Copyright
© 2020, the Authors. Published by Atlantis Press.
Open Access
This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

Cite this article

TY  - CONF
AU  - Russel Butarbutar
PY  - 2020
DA  - 2020/03/27
TI  - Notional Interest Deduction Regime in Belgium: What Indonesia Should Learn to Design the CFC Regulation?
BT  - Proceedings of the 3rd International Conference on Law and Governance (ICLAVE 2019)
PB  - Atlantis Press
SP  - 95
EP  - 102
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200321.013
DO  - 10.2991/aebmr.k.200321.013
ID  - Butarbutar2020
ER  -