#global minimum tax

Income Tax

With GMT in Effect, Government Reviews Tax Incentives to Attract Investors

The Indonesian government is reviewing its fiscal incentive design, including the tax holiday facility, in response to the implementation of the global minimum tax (GMT), which requires a minimum effective tax rate of 15% for multinational enterprise (MNE) groups with consolidated gross turnover of at least EUR750 million. Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono, stated that GMT could reduce the effectiveness of profit-based incentives such as tax holidays, since tax savings obtained by companies through such facilities could still be collected as top-up tax by other jurisdictions. Indonesia has committed to implementing the Pillar 2 GloBE Rules, with technical provisions on GMT regulated under PMK 136/2024. However, the government has not decided to discontinue the tax holiday facility and will continue to study the most appropriate incentive scheme under the new global tax regime. Beyond fiscal incentives, the government also emphasized the importance of expanding market access through international trade cooperation as an instrument to boost investment competitiveness, especially amid global trade tensions. The government identified four key strategies to strengthen the downstream industry ecosystem and high-value-added industries: strengthening investment, offering competitive incentives, improving domestic supply chains, and expanding market access.