Minister of Investment and Downstreaming and head of the Investment Coordinating Board (BKPM), Rosan Roeslani, said on Wednesday that the 15 percent global minimum tax will undeniably have an impact on the tax holiday policy in Indonesia.
For that reason, alternative incentives are needed. The government plans to prioritize non-fiscal incentives.
"This is currently under review, related to what we will do, non-fiscal incentives that we can provide to investors," he said.
In formulating the alternative incentives, the BKPM will coordinate with related ministries, especially the Finance Ministry.
Roeslani said that currently, they are discussing the implications of the GMT on Indonesia's joint venture.
"We can provide incentives in other forms compared to tax holidays, which are already the policy of the Finance Ministry and implemented by the Investment Ministry," he added.
The 15 percent global minimum tax is the result of the Pillar 2: Global Anti-Base Erosion (GLoBE) agreement, with countries agreeing to apply a minimum tax rate on multinational companies.
This aims to reduce the practice of companies shifting profits to countries offering low taxes.
Multinational companies that will be affected by the policy are those with global revenues above 750 million euros.
As per the agreement, if a company pays less than 15 percent tax in a jurisdiction, the company's home country can levy an additional tax (top-up tax) till it reaches 15 percent.
For example, if a company is only taxed at 5 percent in a country, the home country can impose an additional 10 percent tax.
For Indonesia, considering that the current corporate income tax is set at 22 percent, the tax exemption that the government can provide is 7 percent.
The figure has been obtained from the difference between 22 percent corporate income tax and the 15 percent global minimum tax.
Regarding the tax holiday, the Indonesian government has extended the incentive until December 31, 2025.
As per the provision laid down in the Regulation of the Finance Minister Number 69 of 2024, corporations in the pioneer industry can apply for a corporate income tax exemption of up to 100 percent, so the effective rate can reach zero percent.
However, there are different provisions for multinational companies in line with the global minimum tax rule of 15 percent.
If the corporate income tax reduction facility pushes the effective tax paid to below 15 percent, the company will be subject to additional domestic minimum tax levies.
Translator: Imamatul Silfia, Cindy Frishanti Octavia
Editor: Aditya Eko Sigit Wicaksono
Copyright © ANTARA 2025
