Quezon, Philippines, The PRAKARSA policy research and advocacy institute together with APMDD (The Asian Peoples' Movement on Debt and Development) as co-coordinator of the Asian Tax and Fiscal Justice Network (TAFJA) held GAT@10 International Conference in Quezon City, Philippines on 9 - 11 November 2023.
This activity was also supported by Canada for Tax Justice (C4TF) and attended by TAFJA members from throughout the Asian Region. This international conference was held to commemorate 10 years of the Global Alliance for Tax Justice (GATJ). In addition, this activity aims to celebrate the solidarity and support of the regional tax justice community which has encouraged GATJ in the struggle for tax justice over the last 10 years.
This meeting also intends to identify challenges, achievements in global and regional campaigns and advocacy, and exchange knowledge and learning, especially regarding the extractive industry and its relationship with current global tax regulations. Most importantly, this international conference is a space for renewed commitment and strengthening collective work among members of the Tax and Fiscal Justice Network around the world. The theme raised in this conference is "Tax and Extractives: Make MNCs Pay Their Share, Rewrite Global Tax Rules!".
In his opening speech, Herni Ramdlaningrum, Program Manager PRAKARSA, explained that this conference was not only a celebration of GATJ's struggle over the last 10 years, but also a strategic momentum to celebrate global solidarity, reflect on achievements, identify current challenges, and formulate new commitments in the global struggle for tax justice. Herni also emphasized attention to the urgency in dealing with the global tax crisis and issues extractivism and how multinational companies fulfill their obligations in paying taxes.
Herni said that the conference was also to identify challenges, exchange knowledge and renew commitment. "The hope is that the fair tax network can increase understanding of the relationship between the struggle for tax justice and challenges at the local, national and regional levels." (said Herni, Program Manager of The PRAKARSA)
According to Herni, this conference is an important milestone in the global movement for tax justice, providing encouragement for tax justice advocates to continue fighting for change and encouraging fair and effective international cooperation.
Apart from that, Jeannie Manipon, Senior Program Manager of APMDD in her speech highlighted three important points in this conference. First, he emphasized the importance of the 10th anniversary celebration to pay tribute to GATJ which has fought for a decade for tax justice. He expressed his pride in being part of this collective struggle and his commitment to future cooperation regarding tax justice. Second, Jeannie emphasized the theme of the conference, especially its relevance for the Philippines which has a long history of colonial and neocolonial power dynamics, especially in the extractive industry. He detailed the complex legal and regulatory framework governing mining as well as the industry's questionable economic contribution, highlighting the need to address issues such as tax exemptions, environmental damage and social impacts.
Finally, Jeannie draws attention to the 10th anniversary of super typhoon Haiyan (Yolanda) and its profound impact on mining-affected communities. He highlighted the role of extractive industries in exacerbating the climate crisis and the struggle of affected communities to obtain justice and rehabilitation. Jeannie emphasizes the interconnectedness of the global struggle for tax justice with local, national struggles and environmental issues.
Apart from giving a speech, Herni also gave a presentation in one of the sessions regarding the calculation results PRAKARSA related to illicit financial flows in the extractive sector, especially how the problem of Illegal Financial Flows (Under-Invoicing) occurs in Coal Commodities and their Derivatives in Indonesia. The total value of Under-Invoicing over the last 10 years is around 72,3 billion USD. In the last 10 years, the difference in total Under-Invoicing value records was dominated by sub-commodity codes 270119 and 270112. In 2021, sub-commodity code 270210 recorded the highest Under-Invoicing value of around 2,8 billion USD. In the practice of over-invoicing, illegal financial flows in the coal and derivatives sector in Indonesia over the last 10 years reached 54,7 billion USD. In the last 10 years, the difference in the total value of over-invoicing has also been dominated by the two subcommodity codes. The total value of over-invoicing reached its highest figure in 2012 at 9,2 billion USD.
Apart from that, Herni said: PRAKARSA succeeded in estimating potential losses from illegal financial flows using the invoice deviation method (under and over) in exports of the Coal and Derivatives Sector in Indonesia, which in the last 10 years was estimated to reach 127,92 billion USD or 44 percent of the total export value. Under-invoicing of Non-Tax Revenue (BNPB) from Coal and its Derivatives for 10 years also resulted in state losses with a potential loss of 2,3 billion USD. On average every year, BNPB's losses are 230,6 million USD, with the largest value occurring in 2021 amounting to 398,8 million USD. There was a significant increase from 2020 to 2021, under-invoking increased by 254,4% from the previous value. This can happen because the export value which increased 100% from 2020 to 2021 was not followed by good supervision.
In closing, Herni revealed that the impact of illicit financial flows resulted in failed economic growth and reduced public revenues that could be allocated to education, health care, infrastructure, job creation, poverty alleviation programs, and other aspects. "These practices are evidence of policy gaps that are exploited by multinational companies to commit tax evasion. Without immediate action to address this, the state will lose its capacity to collect the revenues needed to fulfill people's rights," (concluded Herni, Program Manager of The PRAKARSA).
Therefore, fair tax networks throughout the world need to continue to build solidarity to monitor multinational companies in fulfilling their obligations in paying fair taxes.