The Indonesian government is gearing up to implement the Global Minimum Tax (GMT) at a minimum effective rate of 15% while maintaining its commitment to attracting foreign investment.
Various measures, including additional incentives and regulatory adjustments, are being formulated to align with international standards and retain Indonesia’s investment appeal.
The Ministry of Investment and Downstreaming/Investment Coordinating Board (Badan Koordinasi Penanaman Modal or BKPM) is exploring alternative incentives to accommodate the GMT implementation by the end of 2025. BKPM Expert Staff, Andi Maulana, highlighted the importance of these new incentives during the Indonesian Economists’ Sarasehan event on Tuesday, the 3rd of December.
“Regarding the Global Minimum Tax agreement, which the Ministry of Finance plans to enforce by late 2025, we must prepare additional incentives beyond those currently offered, such as the tax holiday,” Maulana said. He noted that the government has approximately one year to finalise the new incentive schemes to attract investors.
Minister of Investment and Downstreaming as well as the Head of BKPM, Rosan Roeslani, emphasised the potential impact of GMT on Indonesia’s investment climate but reassured stakeholders that Indonesia is determined to ensure tax rights remain within the country.
“If the Global Minimum Tax is enforced, and we collect only 15%, the respective country will claim the tax. So, the benefits won’t be ours,” Rosan previously explained during a press conference in Jakarta on Sunday, the 3rd of November.
Roeslani had also encouraged investors to remain optimistic.
“There’s no need to worry; we can offer alternative incentives to compensate for the global regulation while adhering to applicable rules,” he added.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, acknowledged these concerns, stating that Indonesia is no longer willing to lose corporate income tax revenue from multinational enterprises operating domestically.
“We don’t want multinational companies enjoying tax holidays here but then paying taxes in their home countries,” Hartarto remarked on Wednesday, the 4th of December.
Despite the GMT, the government remains committed to providing tax holidays to foreign companies to bolster Indonesia’s competitiveness. Deputy for Macroeconomic and Financial Coordination, Ferry Irawan, explained that the tax holiday programme and GMT principles can operate in tandem.
“Taxpayers can still apply for tax holiday incentives under the Ministry of Finance’s Regulation 69/2024 until the 31st of December, 2025,” Irawan previously said in an interview with CNBC Indonesia on Wednesday, the 6th of November.
To mitigate the risk of top-up taxes being imposed by other jurisdictions, Indonesia plans to introduce the Qualified Domestic Minimum Top-Up Tax (QDMTT). This measure will allow Indonesia to claim additional taxes on companies benefiting from tax holidays, ensuring compliance with the GMT rate of 15%.
“If multinational enterprises benefiting from tax holidays are taxed below 15%, they will be subject to a top-up tax to meet the GMT rate,” Irawan also explained, referencing the Ministry of Finance’s Regulation 69/2024.