Indonesia Officially Implements 15 percent Global Minimum Tax

Jakarta, VIVA – Indonesian Ministry of Finance has implemented a global minimum tax, effective starting in 2025. This policy aims to minimize unhealthy tax rate competition.

With the issuance of Minister of Finance Regulation Number 136 of 2024 on December 31, 2024, the implementation of the global minimum tax is part of the Pillar Two agreement initiated by the G20 and coordinated by the OECD, supported by over 140 countries.

Currently, more than 40 countries have adopted this provision, with the majority applying it in 2025.

"Global minimum tax represents the collective efforts of countries worldwide, including Indonesia, which have been pursued for at least the past five years," said Head of the Fiscal Policy Agency at the Ministry of Finance, Febrio Kacaribu on Thursday (Jan 16).

Kacaribu explained that under this provision, multinational companies with a global consolidated turnover of at least 750 million Euros will be required to pay a minimum tax of 15% in the countries where they operate.

“This initiative aims to reduce unhealthy tax rate competition (race to the bottom) by ensuring that multinational companies with a global consolidated turnover of at least 750 million Euros pay a minimum tax of 15% in the countries where they operate. This provision does not affect individual taxpayers or SMEs,” he explained.

He then emphasized that implementing a global minimum tax underscores the government's commitment to creating a healthier and more competitive investment climate.

With this policy, taxes will no longer be the primary factor in determining investment destinations.

"Through this regulation, tax avoidance practices, such as through tax havens, can be curbed. We welcome this agreement as it is very positive for creating a fairer global taxation system," he said.

In line with the global agreement, this provision applies to corporate taxpayers that are part of multinational groups with a global consolidated turnover of at least 750 million Euros.

Such taxpayers will be subject to a global minimum tax rate of 15% starting from the 2025 fiscal year.

If the effective tax rate is less than 15%, taxpayers must pay additional taxes (top-up) no later than the end of the following fiscal year.

For example, for the 2025 fiscal year, the estimated amount of tax must be paid by December 31, 2026, at the latest.

Regarding the obligation to report the global minimum tax, taxpayers are given up to 15 months after the fiscal year ends.

Specifically, in the first year a taxpayer falls under this provision, the government provides leniency, allowing reporting to be completed up to 18 months after the fiscal year ends.

For instance, if a taxpayer falls under this provision for the 2025 fiscal year, the first report must be submitted by June 30, 2027.

Subsequently, for the 2026 fiscal year, the report must be submitted by March 31, 2028. Provisions regarding the forms, procedures for filling out, payment, and submission of annual tax returns will be determined by the Director General of Taxes.

In implementing the global minimum tax, the government remains mindful of Indonesia's investment climate.

To this end, sectors driving future economic growth will be supported with targeted and measured incentives to maintain their competitiveness.

"Through collaboration with countries worldwide, implementing the global minimum tax marks a significant milestone in reforming a more inclusive global taxation system and fostering sustainable economic growth," he stated.

Furthermore, the government is optimistic that this step will not only enhance fairness in the taxation system but also strengthen national investment competitiveness amidst global challenges.

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17 Januari 2025