Regulation No. 136 of 2024 (PMK-136) issued by Indonesia’s Ministry of Finance (MoF) on 31 December 2024 implements a global minimum tax (GMT) in the country for fiscal years starting on or after 1 January 2025. Under the GMT framework, taxpayers with an effective tax rate (ETR) of less than 15% will be required to pay a top-up tax to bridge the gap. The GMT is applicable to multinational enterprises (MNEs) that operate in at least two jurisdictions and have an annual consolidated group revenue of at least EUR 750 million in at least two of the four preceding fiscal years.
Two categories of MNEs must thoroughly assess the implications of the GMT:
For GMT purposes, the ETR is determined using a detailed formula that involves dividing "covered taxes" by GloBE income, with the calculation requiring extensive accounting and tax adjustments.
PMK-136 introduces three primary charging mechanisms that are aligned with the OECD Model Rules:
All CEs in Indonesia must submit specific documents to the Directorate General of Taxation (DGT), i.e., a top-up tax return, GloBE Information Return or GIR and a notification form.
With respect to the top-up tax return, the UPE of an in-scope MNE group that is considered an Indonesian taxpayer must file the return for GloBE, DMTT and/or UTPR purposes. The GloBE income tax return is filed by the Indonesian UPE, the DMTT income tax return by the Indonesian CEs and the UTPR income tax return by the Indonesian CEs if there is any tax payable based on the UTPR in Indonesia.
The GIR is to be submitted by the Indonesian UPE and must contain comprehensive details about the CEs, organisational framework of the MNE group and detailed calculation of the top-up tax. If a non-Indonesian UPE designates an Indonesian CE as the reporting entity or if the reporting CE is situated in a country or jurisdiction that does not have a valid competent authority agreement with Indonesia, the Indonesian CE must file the GIR with the DGT.
All Indonesian CEs that belong to an in-scope MNE group must submit a notification to the DGT that includes key information about the UPE, specific details about the Indonesian CEs and identification of the designated CE responsible for submitting the GIR. An exemption from this requirement will apply if the Indonesian CE has already submitted the GIR to the DGT.
The top-up tax must be paid in the Indonesian currency by the end of the following tax year, while the top-up tax return, GIR and notification must be submitted no later than 15 months after the end of the tax year (18 months for the first year of implementation). Where the fiscal year ends on 31 December 2025, the first payments will be due by 31 December 2026 and first filings by 30 June 2027.
Administrative sanctions will be imposed for failure to comply with the reporting and filing obligations.
Irwan Kusumanto
Suwenny Leonardi
BDO in Indonesia
Affected Parties
Two categories of MNEs must thoroughly assess the implications of the GMT:
- A group of entities related through ownership or control, such that the assets, liabilities, income, expenses and cash flows of the entities are included in the consolidated financial statements of the ultimate parent entity (UPE) or excluded solely on the basis of materiality or because the entity is held for sale; and
- Entities located in one country or jurisdiction that have one or more permanent establishments (PEs) in another country or jurisdiction, provided such entities are not part of the group referred to in the first bullet.
Key Steps to Assessing Liability Under the GMT Rules
Calculation Mechanism
For GMT purposes, the ETR is determined using a detailed formula that involves dividing "covered taxes" by GloBE income, with the calculation requiring extensive accounting and tax adjustments.PMK-136 introduces three primary charging mechanisms that are aligned with the OECD Model Rules:
- Income Inclusion Rule (IIR): Indonesian entities, including the UPE, intermediate parent entity or partially owned parent entity, are required to pay a top-up tax if they directly or indirectly control entities in foreign jurisdictions where the ETR is below 15%.
- Domestic Minimum Top-Up Tax (DMTT): All CEs in Indonesia are obliged to pay a top-up tax if the ETR in Indonesia is below the global minimum threshold of 15%.
- Undertaxed Payment Rule (UTPR): CEs in Indonesia must pay an allocated top-up tax when the top-up tax liability in low-tax foreign jurisdictions remains unpaid, either due to the absence or insufficiency of the DMTT or IIR in those jurisdictions.
Compliance Requirements
All CEs in Indonesia must submit specific documents to the Directorate General of Taxation (DGT), i.e., a top-up tax return, GloBE Information Return or GIR and a notification form.With respect to the top-up tax return, the UPE of an in-scope MNE group that is considered an Indonesian taxpayer must file the return for GloBE, DMTT and/or UTPR purposes. The GloBE income tax return is filed by the Indonesian UPE, the DMTT income tax return by the Indonesian CEs and the UTPR income tax return by the Indonesian CEs if there is any tax payable based on the UTPR in Indonesia.
The GIR is to be submitted by the Indonesian UPE and must contain comprehensive details about the CEs, organisational framework of the MNE group and detailed calculation of the top-up tax. If a non-Indonesian UPE designates an Indonesian CE as the reporting entity or if the reporting CE is situated in a country or jurisdiction that does not have a valid competent authority agreement with Indonesia, the Indonesian CE must file the GIR with the DGT.
All Indonesian CEs that belong to an in-scope MNE group must submit a notification to the DGT that includes key information about the UPE, specific details about the Indonesian CEs and identification of the designated CE responsible for submitting the GIR. An exemption from this requirement will apply if the Indonesian CE has already submitted the GIR to the DGT.
The top-up tax must be paid in the Indonesian currency by the end of the following tax year, while the top-up tax return, GIR and notification must be submitted no later than 15 months after the end of the tax year (18 months for the first year of implementation). Where the fiscal year ends on 31 December 2025, the first payments will be due by 31 December 2026 and first filings by 30 June 2027.
Administrative sanctions will be imposed for failure to comply with the reporting and filing obligations.
Irwan Kusumanto
Suwenny Leonardi
BDO in Indonesia