Finance Minister Affirms Significance of International Tax Cooperation for SDGs at ADB Meeting

Minister of Finance Sri Mulyani (Photo by: Cabinet Secretariat PR Documentation)

In a bid to achieve sustainable development goals, Minister of Finance Sri Mulyani Indrawati stated the importance of strengthening domestic resource mobilization (DRM) and international tax cooperation.

“For the ADB (Asian Development Bank) member countries, the mobilization of domestic resources is very critical. As you can see, the need to develop, and how (member countries) actually obtain the resources to achieve development goals, is still very, very high,” the Minister said at the 53rd Annual Meeting of the ADB held virtually on Thursday (17/9).

On tax cooperation, the Minister stated that currently, Indonesia’s tax ratio is still low and the tax reform process is being carried out to improve the quality of taxation.

For this reason, the Minister welcomed the regional tax cooperation initiated by the ADB and it is expected that the cooperation will also improve the quality of tax management in member countries. The Minister acknowledged that the exchange of knowledge, experience and policy practices in tax cooperation is currently very important.

“Indonesia has taken part in international tax cooperation initiated by the IMF (International Monetary Fund), the World Bank or the OECD (Organisation for Economic Co-operation and Development). We are also actively involved in base erosion profit shifting,” Sri Mulyani said.

Indonesia has also made various efforts to prevent tax evasion in multilateral cooperation. According to her, tax avoidance needs to be deal with because Indonesia adheres to an open economy.

The Minister also added that Indonesia is a country with rich natural resources, so it should be noted that many companies have cross-border business activities. Therefore, the Minister said that this could be an opening for tax evasion.

“For us, of course, as the ADB member countries, the initiative of President Asakawa is very important and we really welcome it. This initiative will become an additional forum for all of us to discuss and to get support on this international and regional tax cooperation,” she said.

Earlier, at the event, the ADB President Masatsugu Asakawa said that ADB is building a regional platform to promote knowledge sharing and strengthen cooperation on tax policies and cross-economic tax administration in Asia and the Pacific and their development partners.

“I firmly believe that one of the keys to success in achieving the world’s sustainable development goals after COVID-19 is over lies in strengthening domestic resource mobilization and international tax cooperation,” the ADB President said.

This regional-hub forum will focus on the promotion of domestic resource mobilization and international tax cooperation through close collaboration between finance and tax authorities in developing countries, such as international organizations: the IMF, the OECD, the World Bank, and regional tax associations. (Ministry of Finance/EN)

Translated by: Fairuzzamani Inayatillah
Reviewed by: Mia M. Bonaedy