Indonesia Officially Implements 15 Percent Global Minimum Tax

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance Febrio Kacaribu. (Photo: Doc. Antara)

JAKARTA - Indonesia has officially implemented a global minimum tax. This application is in line with the issuance of Minister of Finance Regulation (PMK) Number 136 of 2024 regarding the imposition of global minimum tax which will take effect in the 2025 fiscal year.

The implementation of global minimum tax provisions is part of the Pilar Dua agreement initiated by the G20 and coordinated by the OECD, and supported by more than 140 countries.

Currently, there are more than 40 countries that have implemented these provisions, with the majority of countries implementing them by 2025.

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu said that the global minimum tax is a manifestation of the efforts of countries in the world, including Indonesia, which have been jointly worked on in at least the last five years.

According to him, this initiative aims to minimize competition for unhealthy tax rates (race to the bottom) by ensuring that multinational companies with global consolidated economies of at least 750 million euros pay a minimum tax of 15 percent in the country where the company operates.

"This provision does not have an impact on taxpayers of individuals and MSMEs," he said in his statement, Thursday, January 16.

Febrio conveyed that the implementation of the global minimum tax emphasized the government's commitment to creating a healthier and more competitive investment climate.

Through this policy, Febrio emphasized that taxes are no longer a major factor in determining investment destination countries.

With this provision, tax evasion practices such as through tax haven can be prevented. We welcome this agreement because it is very positive in creating a fairer global tax system," he continued.

In line with the global agreement, Febrio conveyed that this provision applies to corporate taxpayers who are part of a multinational corporate group with a global consolidated turnover of at least 750 million euros.

Febrio said the taxpayer in question would be subject to a global minimum tax with a tariff of 15 percent starting the 2025 tax year.

According to Febrio, in terms of effective tax rates of less than 15 percent, taxpayers must make additional tax payments (top ups) no later than the end of the next tax year. For example, for the 2025 fiscal year, the estimated tax amount is paid no later than December 31, 2026.

Regarding the obligation to report global minimum taxes, Febrio said taxpayers were given no later than 15 months after the tax year ended.

As specifically for the first year that taxpayers are included in the scope of this provision, the government provides concessions for taxpayers to report, which is no later than 18 months after the end of the tax year.

For example, if the taxpayer is included in the coverage in the 2025 fiscal year, then the first report will be carried out no later than June 30, 2027.

Furthermore, for the 2026 fiscal year, reporting will be carried out no later than March 31, 2028. Provisions regarding the form of forms, procedures for filling, payment, and reporting of annual notification letters are determined by the Director General of Taxes.

In implementing the global minimum tax, Febrio said the government still pays attention to the investment climate in Indonesia. For this reason, sectors that will drive economic growth in the future will maintain competitiveness through the provision of targeted and measurable incentives.

Through a synergy with countries around the world, Febrio said the implementation of global minimum taxes is an important milestone in reforming a more inclusive global tax system and supporting sustainable economic growth.

"The government is optimistic that this step will not only increase justice in the tax system, but also strengthen the competitiveness of national investment in the midst of global challenges," closed Febrio.