Analysis Of Controlled Foreign Company (Cfc) Rules In Indonesia To Prevent Tax Avoidance Practises

To counter deferral tax payment as one of tax avoidance scheme, some countries have a set of rules called CFC (Controlled Foreign Company) rules. On July 26 2017, Indonesia issued the latest regulation on CFC rules which is Minister of Finance Regulation (MFR) number 107. This research aims to analyze how the newest CFC rules in Indonesia, MFR No. 107/MFR.03/2017, can be used to counteract tax avoidance practices and what are the constraints in implementing these newest CFC rules in Indonesia. This research conducted with qualitative approach. Data collection using literature research and interview. This research concluded that the latest CFC rules in Indonesia, MFR No. 107/MFR.03/2017, can be used to counteract tax avoidance practices by already improve the deemed dividend mechanism, has covered provision on indirect
ownership, has covered provisions on trusts, and has covered provisions on foreign tax credit. The constraints in implementing CFC rules in Indonesia, MFR No. 107/MFR.03/2017, are the scope about CFC is too extensive so it become ineffective to implemented, complication in detecting indirect ownership and
joint ownership, complication in obtaining data and information on supervisory process by Directorate General of Taxes (DGT), and the lack of awareness about CFC issue by DGT officials.