By implementing the 15% global minimum tax, Indonesia underscores its dedication to international tax reform. The country aims to establish a more transparent and equitable taxation environment for multinational corporations operating within its borders.
Scope and Application
This tax targets MNEs with consolidated global revenues exceeding €750 million. Indonesian subsidiaries of such MNEs will be subject to a top-up tax if their effective tax rate falls below 15%. Conversely, Indonesian parent companies with foreign subsidiaries must also ensure a minimum 15% tax rate is applied, potentially leading to additional tax liabilities.
Government’s Stance and Objectives
Febrio Kacaribu, head of Indonesia’s Fiscal Policy Agency, emphasised that this measure aims to curb tax avoidance practices and foster a fairer global tax system. He stated, “This scheme does not apply to individual taxpayers or micro, small, and medium enterprises (MSMEs).”
Mitigating Investment Impact
To offset potential impacts on investment, the Indonesian government is formulating alternative incentives, focusing on non-fiscal measures. Minister of Investment and head of the Investment Coordinating Board (BKPM), Rosan Roeslani, indicated that these incentives are under review to maintain Indonesia’s attractiveness to investors.
Regional Context
Indonesia’s adoption of the global minimum tax aligns with a broader regional trend. Neighbouring countries, including Thailand, Vietnam, Malaysia, and Singapore, have also committed to implementing the 15% minimum tax rate by 2025, reflecting a collective effort to establish equitable tax practices across Southeast Asia.
Summary
By implementing the 15% global minimum tax, Indonesia underscores its dedication to international tax reform, striving to establish a more transparent and equitable taxation environment for multinational corporations operating within its borders.