Indonesia sets out three mechanisms for global minimum tax
The rules cover multinational groups with annual gross revenue of at least EUR750 million in at least two of the preceding four years.
Indonesia’s Directorate General of Taxes has outlined three ways to collect additional tax under its global minimum tax rules, which aim to ensure covered multinational groups face an effective tax rate of at least 15% in each jurisdiction where they operate.
The Qualified Domestic Minimum Top-up Tax and Income Inclusion Rule took effect on 1 January 2025. The third mechanism, the Undertaxed Payment Rule, became effective on 1 January 2026, according to the Finance Ministry’s tax directorate.
The domestic mechanism applies to Indonesian tax residents that belong to multinational groups and have an effective tax rate below 15%. Ririn Wahyuni Nasrul, a tax examiner in the directorate’s international taxation division, said Indonesia had obtained qualified status, giving it priority to collect the additional tax from multinational groups operating in the country.
The Income Inclusion Rule allows Indonesia to collect top-up tax through a resident parent company. The directorate gave the example of an Indonesian parent with an overseas subsidiary in a country that has not implemented the global rules.
The Undertaxed Payment Rule serves as a final backstop where the parent does not apply the Income Inclusion Rule, or that rule has not fully captured additional tax due on group entities taxed below 15% abroad.
Known as the Global Anti-Base Erosion Rules, or GloBE, the framework targets multinational groups meeting the EUR750 million annual gross revenue threshold in at least two of the preceding four years. For Indonesia’s implementation in 2025, the government will examine revenue for 2021–2024.
