How the Global Minimum Tax Impacts Businesses in Indonesia

Indonesia has officially joined the international movement by adopting the global tax through the Ministry of Finance (MoF) Regulation No. 136/PMK.03/2024 (PMK‑136). This move marks a significant shift in how multinational companies are taxed and reflects Indonesia’s commitment to global fairness and transparency in taxation. 

By aligning with the OECD tax framework, Indonesia aims to prevent profit shifting and ensure that multinational enterprises (MNEs) pay a fair share of taxes where they operate. Implementing this global minimum tax supports a more balanced and competitive business environment. 

What is the Global Tax and Why Does It Matter 

The global tax, also called the global minimum tax, is a key policy introduced by the Organisation for Economic Co-operation and Development (OECD). It sets a universal minimum tax rate of 15% for large multinational corporations, no matter where they operate. The core objective is to prevent companies from moving profits to low-tax countries to avoid higher taxes. 

This global standard is crucial because it creates a level playing field. Without it, countries compete by lowering tax rates, which can erode tax bases and reduce public revenue. By applying this policy, countries like Indonesia are helping to end the global race to the bottom and are promoting more responsible and sustainable tax practices. 

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Indonesia’s Legal Basis for the Global Tax 

Indonesia’s commitment to this global standard is formalized through MoF Regulation No. 136/PMK.03/2024, which was issued on December 31, 2024, and took effect on January 1, 2025. This regulation integrates the OECD/G20 Inclusive Framework on BEPS (GloBE or Global Anti‑Base Erosion rules) into Indonesian tax law. 

The regulation mandates a minimum effective tax rate (ETR) of 15% for MNE groups with global consolidated revenues exceeding €750 million (around IDR 12–13 trillion), achieved in at least two of the previous four fiscal years. This ensures Indonesia is aligned with the OECD Pillar Two standard. 

• Scope and Threshold: Targets large multinational companies that meet the €750 million revenue threshold defined under the OECD Pillar Two framework. 
• Implementation Timeline: The regulation officially took effect on January 1, 2025, marking the beginning of a new era in Indonesia’s approach to global tax compliance. 
• Exemptions: This regulation excludes certain entities, including non-profit organizations, government agencies, pension funds, investment vehicles, and real estate funds. 

This legal structure integrates the tax alignment into Indonesia’s domestic law, reinforcing its commitment to transparency and aligning with international efforts to combat Base Erosion and Profit Shifting (BEPS). 

How the Global Tax Rules Work in Practice 

Indonesia applies a three-part system based on the OECD GloBE rules to effectively implement the global minimum tax. These mechanisms ensure that profits are taxed fairly, even if reported in countries with lower tax rates. 

Income Inclusion Rule (IIR) 

This rule targets the parent company of a multinational group. The parent must pay the difference if any subsidiary pays less than 15% tax. This prevents companies from avoiding taxes through subsidiaries in low-tax countries. 

Undertaxed Payment Rule (UTPR) 

If the IIR does not apply (e.g., the parent is in a country that hasn’t adopted it), the UTPR steps in. It lets Indonesia and other compliant countries collect the top-up tax from the local subsidiaries of that group. 

Domestic Minimum Top-up Tax (DMTT) 

DMTT is applied locally in Indonesia. If an MNE’s effective tax rate in Indonesia is below 15%, the government will collect a top-up tax to meet the minimum level. This system supports tax alignment with the OECD’s global standards and ensures Indonesia receives its fair share of tax from global business operations. 

What Global Companies Must Prepare For 

Multinational companies must tighten VAT compliance and tax reporting processes, as Indonesia enforces the global minimum tax. 

VAT and Financial Reporting 

• Align VAT with Tax Reports: VAT filings match financial statements to avoid audit issues. 
• Improve Documentation: Keep clear, consistent records of transactions and revenue across all jurisdictions. 
• Conduct Internal Reviews: Regular checks help spot risks early and maintain compliance with PMK‑136. 

Compliance Strategies 

• Centralized Data and Oversight: Use a dedicated team to gather tax data and manage top-up tax calculations. 
• File Accurate Global Reports: Submit the required GloBE Information Return with proper ETR assessments. 
• Monitor Compliance Continuously: Stay current with regulations and perform routine internal audits. 

These steps help global businesses stay aligned with Indonesia’s international tax rules while reducing legal and financial risks. 

Navigate Regulatory Shifts with InCorp 

Indonesia’s move to adopt the global minimum tax through PMK‑136 is a major regulatory shift. This means stricter reporting, accurate tax alignment, and greater transparency for multinational companies. 

Expert support is crucial for maintaining compliance and competitiveness. InCorp Indonesia (an Ascentium Company) offers tailored tax consulting services to help you easily adapt. 

• Local and Global Expertise: Deep knowledge of Indonesian tax law and OECD standards. 
• Customized Compliance Solutions: Tailored reporting, documentation, and top-up tax calculation strategies.
• Audit-Ready Support: Structured guidance to reduce risk and improve tax audit preparedness. 

Leverage trusted expertise to adapt confidently to Indonesia’s new tax rules by filling out the form below. 

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