Indonesia 2025 Tax Updates: An Overview

Indonesia 2025 Tax Updates: An Overview

Among all tax regulation updates in Indonesia, the most significant one that raises concerns among business actors is the Global Minimum Tax Regulation. This regulation is not only novel but also quite intricate due to its numerous scenarios that can lead to varying implications

Taxation remains the primary sources of Indonesia’s national revenue. In 2025, Indonesia recorded tax revenues of Rp 1,917.6 trillion out of total state revenue amounting to Rp 2,756.3 trillion. This figure depicts that approximately 69.6% of Indonesia’s national income derived from taxation alone.1 Such numbers underscore the critical role of taxation in sustaining the country’s fiscal health and highlight the importance of strengthening and integrating tax administration to further enhance state revenue.

Over the past years, Indonesia’s tax regulations have undergone notable changes, ranging from minor adjustments to the introduction of new norms that significantly reshape the country’s tax landscape. This article provides an overview of some notable recent developments, offering insights into the evolving framework of Indonesian taxation.

1. Global Minimum Tax

Following its participation as a G-20 member, Indonesia has issued Minister of Finance Regulation No. 136 of 2024 concerning the Imposition of a Global Minimum Tax Based on International Agreements (“PMK No. 136/2024”) to implement the global minimum tax regime effective from 1 January 2025 (except for the GloBE UTPR, which will take effect starting from 1 January 2026). The objective of this regulation is to ensure large multinational corporations pay a minimum level of tax on their profits.

This rules apply to entities that are part of a multinational enterprise group maintaining subsidiaries or permanent establishments in another country or jurisdiction, with an annual gross turnover of minimum of a €750 million per annum based on consolidated financial statements, and met the gross turnover threshold in 2 (two) out of 4 (four) fiscal years preceding the effective fiscal year of GloBE (“MNE Group”).

If the entities’ effective tax rate is below 15%, it will be subject to an additional tax to reach the GloBE minimum tax threshold, based on the following priority scale:

a. Qualified Domestic Minimum Top-up Tax (“QDMTT”): The QDMTT top-up tax must be paid by entities within the MNE Group to the country of the source of income that applies a low tax rate until the global minimum effective tax rate of 15% (fifteen percent) is met;

b. Income Inclusion Rule (“IIR”): If the source country of income does not implement QDMTT and the tax paid in that country is less than 15% (fifteen percent), the domicile country of the parent company may impose an additional tax (top-up tax) to reach the global minimum tax rate; or

c. Undertaxed Profit Rules (“UTPR”): This applies if the source country of income does not implement QDMTT, and the parent company’s domicile country does not implement IIR in its domestic legislation. Under UTPR, other domicile countries of affiliate companies within the MNE Group may impose an additional tax (top-up tax).

The regulation also introduces safe harbour mechanism, which may exempt certain MNE Group companies from the GloBE’s obligations, as long as they meet certain requirements. There are three types of safe harbour under PMK No. 136/2024, i.e., (i) permanent safe harbour, (ii) temporary safe harbour – only up to 30 June 2028, and (iii) UTPR safe harbour.

2. Exchange of Information Under International Treaties on Tax

Directorate General of Tax Regulation No. PER-10/PJ/2025 on the Implementation of Exchange of Information Based on International Agreements (hereinafter referred to as “Regulation No. PER-10/2025”) consolidates and replaces several prior rules on cross-border tax Exchange of Information.

The key terms under Regulation No. PER-10/2025 includes:

a. The Directorate General of Tax (“DGT”) is authorized to obtain, collect, and access information for the purpose of implementing tax laws and regulations. The acquired information may be shared with Partner Nation or Partner Jurisdiction for the purpose of implementing International Treaties.

b. The exchange of Information may occur through: (i) exchange upon request, (ii) spontaneous exchange, and (iii) automatic exchange.

c. The methods for exchanging information are: (i) competent authority meetings; (ii) tax examinations abroad; (iii) simultaneous tax examinations.

At the end of 2025, Indonesia enacted Ministry of Finance Regulation No. 108 of 2025 on Technical Guidelines for Access to Financial Information for Tax Purposes (“MoF Regulation 108/2025”). This regulation serves as a follow up to the implementation of the Addendum to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information (“Multilateral Authority Agreement”), in which the Indonesian government sets out the framework for the Automatic Exchange of Information (“AEOI”) and the Common Reporting Standard (“CRS”). As of 20 January 2026, the DGT has announced that there are now 117 jurisdictions participating in AEOI CRS, with 92 designated as AEOI CRS destination jurisdictions.

3. Procedures On Confiscation And Sale Of Listed Shares For Tax Collection

The DGT has also issued Director General of Taxes Regulation No. PER-26/PJ/2025 on the Procedure for Seizure and Sale of Securities in the Form of Shares Traded in the Capital Market for Tax Collection Purposes (“Regulation 26/2025”). The objective of this regulation is to establish clear procedures for seizing and selling assets held in the Indonesian capital market system, including the steps for the confiscation and sale of listed shares in the Indonesian capital market.

4. Automatic Exchange of Information Rule to Include Reporting Crypto and Other Digital Assets

The Ministry of Finance Regulation No. 108 of 2025 on the Technical Guidelines for Access to Financial Information for Tax Purposes (“MoF Regulation 108/2025”) provides technical guidelines for DGT to access financial information for tax purposes. Under this regulation, DGT is authorized to obtain financial information, evidence, or explanations, either automatically or upon request. This regulation mandates the financial institutions and CARF reporting crypto-assets service providers which satisfy the legal relevance criteria (nexus) (“CARF Reporting CASPs”) to submit information whether automatically or by request.

5. Guidance For Tax Crime Cases From Supreme Court

The Supreme Court has issued Regulation of the Supreme Court of the Republic of Indonesia Number 3 of 2025 concerning Guidelines for Handling Criminal Cases in the Field of Taxation (“SC Regulation No. 3/2025”) provides uniform guideline for handling criminal cases in the field of taxation. Previously, the absence of specific rules led to inconsistent interpretation and application of the handling of tax criminal cases. This regulation addresses several key aspects among other payment and settlement of tax related obligations, beneficial owner of corporate taxpayer, procedure if the taxpayer failure to appear at trial, and rules on seizure / forfeiture of assets.

6. Data Utilization for Tax Audit Optimization

The DGT has issued Director General of Taxes Regulation issued Per-18/PJ/2025 on the Follow-up on Concrete Data (“Regulation 18/2025”). This regulation clarifies and elaborates the definition to ensure more objective examinations. Under the Regulation 18/2025, concrete data refers to information held by the tax authority including tax invoices approved through tax authority information system which has not been reported by the taxpayer in the Value-Added Tax Periodic Notification Letter (Surat Pemberitahuan Masa Pajak Pertambahan Nilai), withholding or collection proof of income tax that has not been reported within the Periodic Income Tax Notification Letter (Surat Pemberitahuan Masa Pajak Penghasilan), and/or evidence of transactions or tax data that can be used to calculate the taxpayer’s tax obligations. Regulation 18/2025 also further specifies and elaborates on what qualifies as transaction evidence or tax data to calculate taxpayer’s obligation.

Moreover, in the area of tax supervision, the Ministry of Finance of Republic of Indonesia has also recently formalized the regulation for Letter Requesting Explanation of Data and/or Information (Surat Permintaan Penjelasan atas Data dan/atau Keterangan or “SP2DK”) through Minister of Finance Regulation No. 111 of 2025 on Taxpayer Compliance Supervision (“Regulation 111/2025”). This regulation underscores the function of SP2DK as an instrument to request explanations concerning data and/or information in the context of compliance monitoring.

7. Circular Letters to Combat BEPs Practices

The DGT has issued several circular letters on Notification on Applicability of Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“Convention”) as modification of provisions of Double Taxation Avoidance Agreement (“DTAA”) between Indonesia and several countries (Tunisia, Armenia, Ukraine, Papua New Guinea, Jordan). These measures were taken to eliminate double taxation with respect to the taxes covered by the DTAA without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.

The modified provisions include provisions concerning capital gain, permanent establishment, dual residency, and adjusted profit.

8. Tax Resident in Indonesia

Indonesia has recently updated its rules on tax residency through Directorate General of Taxation Regulation No. PER 23/PJ/2025 on the Determination of Domestic and Foreign Tax Subjects (“Regulation 23/PJ/2025”). Previously, residency status was largely inferred from the number of days spent in Indonesia or from legal registration. While these factors remain relevant, Regulation 23/PJ/2025 makes clear that they are not conclusive and must be assessed alongside the taxpayer’s actual circumstances.

For individuals, the regulation continues to apply the threshold of physical presence exceeding 183 days within a twelve month period, but it now complements this with an evaluation of actual residence and habitual abode. Residency is thus recognized as more than a matter of counting days, it requires consideration of where an individual’s personal, family, social, and economic ties are genuinely centered.

For entities, the regulation moves beyond a narrow reliance on place of incorporation. Incorporation under Indonesian law still establishes domestic tax subject status, but Regulation 23/PJ/2025 introduces a substantive test of where effective management, strategic decision making, and operational control are carried out. This approach places greater weight on economic reality and aligns more closely with international principles commonly applied in interpreting tax treaties.

9. Tax Treaty Applications

The Government of the Republic of Indonesia has issued a new regulation namely Minister of Finance Regulation No. 112 of 2025, which governs the procedures for the implementation of benefits under the Indonesia’s Tax Treaty (“Regulation 112/2025”). This regulation establishes the procedural framework for applying treaty provisions in Indonesia, covering both resident taxpayers earning foreign sourced income and non resident taxpayers earning income from Indonesian sources.

The stages of treaty application are as follows:

a. the taxpayer must qualify as a resident of a treaty partner jurisdiction, which must be evidenced through a valid and duly authorized Directorate General of Taxes (DGT) Form.

b. the taxpayer must fall within the personal and material scope of the relevant Tax Treaty, including compliance with beneficial ownership requirements where applicable.

c. the application of treaty benefits must not constitute treaty abuse.

d. If treaty benefits depend on specific factual thresholds, these conditions must be demonstrably satisfied based on the taxpayer’s actual economic activities rather than contractual form alone.

Furthermore, Regulation 112/2025 also sets out the limitation on benefits specifying who is entitled to enjoy treaty benefits. The income recipient must meet at least one of the criteria stipulated under the Regulation 112/2025. These include individuals who are tax residents of the treaty partner country, or legal entities with ownership structures sufficiently linked to that jurisdiction. For corporate recipients, eligibility may be demonstrated through majority ownership (over 50%) by individual residents of the treaty partner, or where more than 50% of the entity’s income is not distributed to parties outside the scope of the applicable treaty. Additionally, treaty benefits may be granted to publicly listed companies, provided that more than 50% of their shares are regularly traded on a stock exchange recognized under the relevant treaty.

Conclusion

The majority of tax regulations updates in Indonesia primarily serve as implementing regulations of previously issued provisions. In essence, these updates provide further elaboration and enhance legal certainty in the application of existing regulations by providing more detailed guidelines and technical rules. Among all updates, the most significant one that raises concerns among business actors is the Global Minimum Tax Regulation. This regulation is not only novel but also quite intricate due to its numerous scenarios that can lead to varying implications.

In conclusion, the Indonesian government is anticipated to continue issuing tax updates in the near future to ensure taxpayers’ compliance.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.