technology

Technology Giants Prepare! Indonesia Officially Adopts New Global Tax Regulations

Indonesia has officially joined the group of nations implementing a global minimum tax rate of 15% starting in 2025. This initiative is part of an international effort to ensure that multinational corporations, including major technology firms such as Google, Amazon, and Meta, contribute a fair share of taxes regardless of their operational locations. 

This decision underscores Indonesia's commitment to supporting the OECD initiative aimed at combating tax avoidance practices. The formal adoption of the global minimum tax aligns with the issuance of Minister of Finance Regulation (PMK) Number 136 of 2024.  

Febrio Nathan Kacaribu, Head of the Fiscal Policy Agency (BKF) at the Ministry of Finance, stated that the global minimum tax reflects the collaborative efforts of countries worldwide, including Indonesia, which have been pursued over the past five years.  

The initiative seeks to mitigate unhealthy tax competition, often referred to as a "race to the bottom," by ensuring that multinational companies with a global consolidated revenue 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 and small and medium-sized enterprises (SMEs)," Febrio noted in an official statement on Thursday, January 16. 

Wahyu Nuryanto, Executive Director of MUC Tax Research, assessed that this policy aims to close loopholes that allow multinational corporations to avoid taxes, particularly through profit shifting to countries with lower tax rates. Consequently, several countries within the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), including Indonesia, have agreed to implement a minimum tax rate of 15%. 

Thus, if any country continues to offer tax incentives that result in an effective tax rate below 15%, the difference will be collected by the country or jurisdiction where the parent company is located as a Top-Up Tax.

Tag: Febrio Nathan Kacaribu Technology