Notional Interest Deduction Regime in Belgium: What Indonesia Should Learn to Design the CFC Regulation?
- 10.2991/aebmr.k.200321.013How to use a DOI?
- NID, regimes, Belgium, CFC, Indonesia
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.
- © 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 -