Frequently Asked Questions

In the age of tax globalization and digitalization, Indonesia is taking a decisive step toward aligning its tax regime with the OECD/G20 Inclusive Framework through the Global Minimum Tax Implementation in Indonesia. This bold move seeks to ensure that multinational enterprises (MNEs) pay a fair share of taxes—at a minimum effective rate of 15%—regardless of where they operate or where their headquarters are based.

But this isn’t just a regulatory update. It’s a paradigm shift that reshapes how tax incentives work, how profits are taxed across borders, and how companies make business decisions. For those doing business in Indonesia—or planning to—understanding the nuances of this tax transformation is no longer optional. It’s essential.

Key Takeaways

• Indonesia is set to implement the Global Minimum Tax in line with OECD Pillar Two by 2026.
• Multinational companies will face top-up tax liability if effective tax rates fall below 15% in any jurisdiction.
• Indonesia may introduce a domestic top-up tax to protect its tax base and revenue stream.
• Companies must review corporate structures and align tax strategies with GMT rules.
• Kusuma & Partners is ready to assist businesses in navigating the legal and tax complexities of Global Minimum Tax.

What is the Global Minimum Tax (GMT)?

The Birth of GMT: OECD’s Pillar Two Framework

The GMT is part of the OECD’s two-pillar solution to BEPS (Base Erosion and Profit Shifting). Pillar Two introduces a global floor of 15% tax on MNEs with revenues above €750 million. The main goal is to prevent profit shifting to low or zero-tax jurisdictions and ensure taxation where economic activities occur.

Key Components: IIR, UTPR, and STTR

• Income Inclusion Rule (IIR): Allows parent entities to top up taxes when their subsidiaries are undertaxed.
• Undertaxed Payments Rule (UTPR): Grants countries the right to deny deductions or impose taxes on undertaxed intercompany payments.
• Subject to Tax Rule (STTR): A treaty-based rule enabling source countries to tax certain payments below a minimum rate.

These rules create a multi-jurisdictional safety net, reducing the incentive to shift profits to low-tax jurisdictions.

Why the GMT is a Game-Changer for Multinational Corporations

Ending the “Race to the Bottom” in Tax Rates

For years, jurisdictions competed for foreign investment by offering extremely low corporate tax rates. The GMT eliminates this strategy for MNEs and rebalances global tax competition.

Redefining How Tax Incentives Are Viewed

Indonesia’s tax holidays, investment allowances, and SEZ regimes may no longer be effective for MNEs subject to the GMT. The value of such incentives will be eroded unless Indonesia restructures them to fit within the GMT framework.

READ MORE: New Tax Audit Procedures in Indonesia : Key Updates and Implications for Taxpayers

Indonesia’s Strategic Position and Commitment

Indonesia’s G20 Role and Legal Alignment

As a G20 member and one of Southeast Asia’s most dynamic economies, Indonesia plays a pivotal role in global tax discussions. The country has committed to implement the GMT no later than 2026, as publicly stated by the Ministry of Finance and the Fiscal Policy Agency.

2024–2026: Regulatory Roadmap and Anticipated Deadlines

• 2024: Legal drafting of GMT provisions under Omnibus Law.
• 2025: Public consultations and simulation runs with major MNEs.
• 2026: Full legal and administrative implementation.

The Drafting of Indonesia’s GMT Legal Framework

Omnibus Law: Key Legal Provisions on GMT

The upcoming Omnibus Law on taxation will likely introduce key rules to enforce GMT, including:

• The definition of “Covered Taxes”
• Mechanisms for applying top-up taxes
• Anti-abuse provisions
• Reporting and dispute resolution channels

Role of the Ministry of Finance and Directorate General of Taxes

The DGT will be the primary enforcement body, while BKF will coordinate Indonesia’s international tax policy and treaty negotiations. PMK (Ministry of Finance Regulations) will be used to operationalize rules.

How GMT Interacts with Indonesia’s Existing Tax Incentives

SEZs, Tax Holidays, and Super-Deductions: Still Relevant?

Unless adjusted, these incentives may become ineffective for MNEs. For example, an MNE receiving a 0% tax rate under an SEZ may still need to pay a 15% top-up tax in another jurisdiction.

Domestic Top-up Tax: A Buffer Against Revenue Drain

Indonesia is likely to introduce a Qualified Domestic Minimum Top-up Tax (QDMTT)—a mechanism that allows Indonesia to collect the top-up before foreign jurisdictions can. This protects tax revenue and maintains investor interest.

Corporate Impact: What Multinational Enterprises Must Know

Risk of Double Taxation and Tax Disputes

Without proper planning, MNEs may face double taxation, disputes over profit attribution, and costly audits across multiple jurisdictions.

Corporate Governance and Reporting Pressure

GMT introduces complex reporting requirements, including GloBE Information Returns, ETR calculations, and detailed reconciliations—placing significant pressure on finance and tax departments.

Legal and Practical Challenges in Implementation

Administrative Complexity and Legal Uncertainty

Unclear definitions, evolving guidelines, and the lack of uniform international standards pose real challenges. Companies may need to revise their tax policies frequently.

Risk Assessment for Tax and Legal Teams

Legal departments must engage in multijurisdictional risk analysis, litigation scenario planning, and advance rulings to minimize uncertainty.

READ MORE: New Beneficial Ownership Regulation in Indonesia 2025: What Businesses Must Know

Case Analysis: Indonesia-Based MNE with Regional Presence

Step-by-Step GMT Calculation

An Indonesian subsidiary pays 5% tax under an SEZ. Its parent is based in Japan, where GMT is active. Japan will impose a 10% top-up tax under IIR unless Indonesia introduces QDMTT.

What If No Domestic Top-Up Tax Exists?

The tax revenue flows to Japan, not Indonesia. The incentive becomes ineffective, and Indonesia loses fiscal sovereignty unless proactive legal reforms are made.

Best Practices for Compliance and Risk Mitigation

Establish a GMT Task Force Within the Company

Assign legal, tax, and compliance experts to assess exposure, plan structures, and liaise with authorities.

Review Group Structures, IP Arrangements, and Substance

Ensure economic substance in low-tax jurisdictions, evaluate intercompany pricing, and consider restructuring to manage ETR.

Practical Commentary from Kusuma & Partners

We at Kusuma & Partners Law Firm have closely monitored the Global Minimum Tax Implementation in Indonesia and assisted clients in evaluating legal and tax impacts. We emphasize:

• Early readiness is key.
• Documentation and transparency are crucial to withstand audits.
• Businesses should assess cross-border tax structures now—not later.
• Consider whether restructuring or localizing profits is more sustainable long-term.

Our tax and legal teams can support from compliance planning to strategic restructuring to ensure full alignment with upcoming GMT obligations.

Conclusion

The Global Minimum Tax Implementation in Indonesia is not just another tax law—it’s a redefinition of global tax architecture. It’s the new reality for multinational companies, and Indonesia is aligning fast.

How We Can Help

Need help navigating the complexities of the Global Minimum Tax Implementation in Indonesia? Contact Kusuma & Partners Law Firm today.

Fill in the form below to get our expert guidance.

“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”

In an effort to enhance corporate transparency and prevent financial crimes, Indonesia has introduced new regulations on beneficial ownership reporting. The Ministry of Law and Human Rights (MOL) issued Regulation No. 2 of 2025 on the Verification and Supervision of Beneficial Owners of Corporations (“MOL Regulation No. 2/2025), reinforcing compliance requirements for companies operating in Indonesia. This regulatory update aligns with global Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) frameworks, ensuring that corporate structures are more transparent and accountable.

Understanding Beneficial Ownership Regulation in Indonesia 2025

Beneficial ownership refers to the individual(s) who ultimately own, control, or benefit from a legal entity, even if their name is not officially listed as the owner. This includes those who have at least 25% of shares or voting rights, have control over financial decisions, or significantly benefit from the company’s operations. MOL Regulation No. 2/2025 expands and strengthens the reporting obligations of legal entities in Indonesia. The primary aim of this regulation is to ensure that businesses disclose their beneficial owners—the individuals who ultimately own, control, or benefit from a company’s operations.

Key Compliance Requirements under Indonesia’s Beneficial Ownership Regulation 2025

The latest regulation introduces substantial modifications to the beneficial ownership reporting framework, affecting corporations operating in Indonesia. The following are the critical changes brought by MOL Regulation No. 2/2025:

1. Shift from Government Oversight to Corporate Accountability

Previously, the Indonesian government played an active role in monitoring beneficial ownership structures, with businesses relying on government agencies to assess and verify their ownership details.

However, under MOL Regulation No. 2/2025, the responsibility now lies directly with corporations. Companies must:

• Identify their beneficial owners and ensure ongoing compliance with disclosure requirements.
• Verify ownership details through internal due diligence procedures rather than relying on government intervention.
• Implement internal compliance mechanisms to maintain up-to-date records of beneficial owners.

This shift increases corporate responsibility and liability, making it essential for businesses to establish robust compliance frameworks to prevent inadvertent violations.

Legal Implications:

Non-compliance can lead to administrative sanctions, including financial penalties or blacklisting from government procurement processes.

Companies need to ensure that corporate governance policies are updated to reflect the new compliance burden.

2. Expansion of Entities Subject to Beneficial Ownership Reporting

Under the previous regulation, beneficial ownership reporting applied only to a limited set of legal entities, such as limited liability companies, foundations, cooperatives, and partnerships.

MOL Regulation No. 2/2025 broadens the scope of covered entities to now include:

• Limited Liability Companies (PT), including PT PMA
• Foundations & Associations
• Cooperatives
• Limited Partnerships (CVs)
• General Partnerships (Firms/Persekutuan Perdata)
• Capital Partnerships (Persekutuan Modal)
• Sole Proprietorships (Usaha Perorangan)

This expansion ensures that all forms of business entities, regardless of size, ownership structure, or industry, are required to identify and disclose their beneficial owners.

Read More:

• Key Post-Incorporation Compliance for Company in Indonesia
• Setting Up a PT PMA in Indonesia: A Complete Guide for Foreign Investors
• Forms of Foreign Direct Investment (FDI) in Indonesia

3. Enhanced Verification & Know-Your-Beneficial-Owner (KYBO) Compliance

MOL Regulation No. 2/2025 mandates corporations to conduct a more rigorous Know-Your-Beneficial-Owner (KYBO) process, which now includes:

• Annual Submission of Beneficial Ownership Data → Companies must update and report their beneficial ownership information every year. The previous regulation did not impose a strict reporting frequency.
• Document Administration → Corporations are now required to maintain comprehensive records related to their beneficial ownership structure.
• Completion of Beneficial Ownership Questionnaires → This serves as a due diligence measure to confirm the accuracy of submitted data.
• Risk-Based Verification Procedures → Companies must implement risk-based assessments to identify potential risks of money laundering, terrorism financing, or illicit financial transactions.

4. Notaries’ New Role in Beneficial Ownership Verification

A major development under MOL Regulation No. 2/2025 is the formal obligation imposed on notaries to play an active role in verifying beneficial ownership data. When assisting in corporate transactions, notaries are now legally required to:

• Verify Beneficial Ownership Information before notarizing corporate documents.
• Complete Beneficial Ownership Questionnaires, ensuring that the disclosed information is accurate and compliant with the regulation.

This measure strengthens corporate integrity by ensuring that independent legal professionals are involved in verifying ownership structures.

5. Revised Government Supervision Mechanisms

The Directorate General of General Legal Administration (Ditjen AHU) under the Ministry of Law and Human Rights is now responsible for:

• Monitoring Compliance through risk-based assessments, prioritizing companies with potential exposure to financial crimes.
• Focusing on Reporting & Updating Requirements rather than micromanaging internal corporate structures.

A notable change is the elimination of direct government involvement in identifying beneficial ownership details. Instead, the government now focuses on ensuring corporations actively submit and update their beneficial ownership information.

6. Introduction of Administrative Sanctions for Non-Compliance

Unlike the previous regulation, which lacked clear penalties, MOL Regulation No. 2/2025 introduces enforceable administrative sanctions for companies failing to comply with beneficial ownership reporting requirements. These sanctions include:

• Official Reprimands – A formal warning issued to non-compliant entities.
• Blacklisting from Government Systems – Companies may be restricted from accessing public procurement contracts or government services.
• Restricted Access to Corporate Registration Services – Authorities may suspend or delay business registrations, amendments, or licensing processes for non-compliant entities.

The introduction of these penalties serves as a deterrent against non-compliance, reinforcing the Indonesian government’s commitment to financial transparency.

Kusuma & Partners assists companies in the General Corporate, Legal Advisory & Legal Compliance matter, ensuring legal interests while complying with all legal requirements.

Implications for Businesses in Indonesia

With MOL Regulation No. 2/2025 now fully effective, businesses operating in Indonesia must take immediate steps to align their corporate governance practices with the updated legal requirements. Failure to comply could result in regulatory sanctions, reputational damage, or even legal consequences.

To ensure compliance, businesses should focus on:

1. Reviewing & Updating Internal Compliance Policies

Companies should revise their internal governance frameworks to ensure accurate identification, documentation, and reporting of beneficial ownership data.

2. Strengthening KYBO Due Diligence Processes

Companies must conduct enhanced due diligence to verify ownership structures and identify potential risks of financial crimes. A risk-based approach should be implemented to evaluate high-risk shareholders or financial transactions.

3. Engaging Legal & Compliance Experts

Given the complexity of regulatory compliance, companies are strongly encouraged to seek legal counsel to:

• Navigate the new reporting requirements.
• Ensure proper corporate documentation and structuring.
• Mitigate potential risks of administrative penalties.

How Kusuma & Partners Can Assist

At Kusuma & Partners Law Firm, we specialize in corporate compliance, legal advisory & legal compliance. Unlike generic compliance services, Kusuma & Partners tailor’s legal strategies to suit each business’s unique corporate structure and operational needs, ensuring seamless regulatory compliance and long-term business success.

Conclusion

MOL Regulation No. 2/2025 marks a significant step towards corporate transparency in Indonesia. Businesses must take proactive measures to comply with the new reporting obligations to avoid legal and financial risks. Consulting with an experienced legal firm like Kusuma & Partners ensures a smooth compliance process and safeguards businesses from regulatory pitfalls.

For expert legal guidance on beneficial ownership reporting and corporate compliance, contact Kusuma & Partners today.

“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult us.“

On February 14, 2025, the Indonesian Minister of Finance (MoF) issued MoF Regulation No. 15 of 2025 (“PMK-15”), introducing new procedures for tax audits. These updates, while retaining many provisions from previous regulations such as MoF Regulation No. 17/PMK.03/2013 as amended by MoF Regulation No. 184/PMK.03/2015, MoF Regulation No. 256/PMK.03/2014, and Article 105 of MoF Regulation No. 18/PMK.03/2021, also bring significant changes, particularly in the categorization of tax audits and timelines.

Understanding these changes is crucial for taxpayers and businesses operating in Indonesia to ensure compliance and preparedness for tax audits under the new framework.

Key Changes in Tax Audit Procedures :

New Categories of Tax Audit

Under PMK-15, the Directorate General of Taxes (DGT) has restructured tax audits into three categories:

• Comprehensive Tax Audit (Pemeriksaan Lengkap): Similar to the previous field tax audit, this is the most extensive type, covering all items in the tax return and/or tax object notification letter (Surat Pemberitahuan Objek Pajak / SPOP).
• Focused Tax Audit (Pemeriksaan Terfokus): Examines one or several specific items from the tax return or SPOP in an in-depth manner.
• Specific Tax Audit (Pemeriksaan Spesifik): Reviews one or several specific tax return or SPOP items but in a simpler manner compared to a focused tax audit.

For focused tax audits, tax auditors must provide written notification to taxpayers specifying the items under review. However, for specific tax audits, certain procedural requirements such as temporary findings discussions and preliminary meetings with taxpayers are waived.

Adjustments in Tax Audit Timelines

Tax Audit Period

PMK-15 divides tax audits into two phases:

• Testing Period: Starts when the Tax Audit Notification Letter (Surat Pemberitahuan Pemeriksaan / SP2) is delivered to the taxpayer and ends when the Tax Audit Findings Notification Letter (Surat Pemberitahuan Hasil Pemeriksaan / SPHP) is issued.
• Closing and Reporting Period: Begins with the issuance of the SPHP and ends with the final Tax Audit Result Report (Laporan Hasil Pemeriksaan / LHP).

The duration for each type of audit is as follows:

• Comprehensive Tax Audit: testing period maximum 5 months (previously 6 months), closing and reporting period maximum 30 working days.
• Focused Tax Audit: testing period maximum 3 months, closing and reporting period maximum 30 working days.
• Specific Tax Audit: testing period maximum 1 month, closing and reporting period maximum 30 working days.

For audits involving group taxpayers and/or transfer pricing, the testing period can be extended for up to 4 months (previously 6 months). Additionally, tax audits related to oil and gas income tax under Production Sharing Contracts (PSC) follow separate regulations.

Deadline for Submitting a Response to SPHP

Taxpayers must now submit a written response to the SPHP within 5 working days of receipt (previously 7 working days with a possible 3-day extension).

Tips: Consult with Indonesian Tax Advisor for comprehensive and professional tax advice.

Mandatory Temporary Findings Discussion (Pembahasan Temuan Sementara)

Before issuing the SPHP, tax auditors must now conduct a Temporary Findings Discussion with taxpayers, at least one month before issuing the SPHP. During this discussion, taxpayers can present supporting documents, explanations, and bring witnesses, experts, or third parties. The discussion outcomes, including submitted documents and taxpayer attendance, must be recorded in the minutes.

This additional step provides taxpayers more time to respond to audit findings, compensating for the reduced deadline for SPHP responses.

Exceptions to the One-Month Rule for Document Submission

Under PMK-15, documents requested by auditors must be submitted within one month. However, two exceptions apply:

• Documents not yet obtained from third parties may be submitted until the minutes of the Closing Conference (Pembahasan Akhir Hasil Pemeriksaan / PAHP) are signed.
• Additional documents that were not initially requested may also be submitted until the minutes of PAHP signing.

Interaction with Tax Audit on Preliminary Evidence of Tax Crime

DGT will not conduct a tax audit for the same fiscal year where a Preliminary Evidence Audit (Bukti Permulaan / Bukper) or tax investigation is ongoing. This ensures that taxpayers are not subject to multiple overlapping audits for the same period.

Ex-Officio Tax Assessment by Auditors

If tax auditors determine taxable income using an ex-officio approach, they must provide evidence that the taxpayer failed to submit the required documents or provided insufficient documentation.

Integration with the Core Tax System

PMK-15 facilitates the use of Indonesia’s Core Tax System by allowing:

• Electronic document submissions for tax audits.
• Digital signatures on audit-related documents.

However, SPHP delivery and taxpayer responses to SPHP must be conducted in person, facsimile, or electronic, and cannot be submitted via postal, courier, or expedition services.

Conclusion

The implementation of PMK-15 introduces new challenges and opportunities for taxpayers in Indonesia. With shorter timelines, stricter audit procedures, and increased reliance on digital systems, businesses must stay vigilant and well-prepared.

At Kusuma & Partners Law Firm, we are committed to guiding our clients through these regulatory changes, ensuring compliance while protecting their financial interests. If you need expert legal assistance with tax audits or any taxation-related matters, contact us today.

Partnering with Kusuma & Partners Law Firm for Tax Audit Assistance

At Kusuma & Partners Law Firm, we understand the complexities of Indonesia’s evolving tax regulations and the critical importance of a well-prepared approach to tax audits. Here’s why clients trust us:

Deep Expertise in Indonesian Tax Law

Our team specializes in Indonesian tax dispute resolution, including tax audits, tax objections, tax appeals, and judicial reviews. With extensive experience handling corporate and individual tax cases, we ensure compliance while minimizing financial risks.

Strategic Tax Audit Defense

We proactively assist businesses in managing tax audits by analyzing risks, preparing documentation, and representing clients in discussions with tax authorities. Our goal is to prevent unnecessary tax assessments and disputes.

Comprehensive Legal Support

Beyond tax audits, our firm provides legal services in:

• Monthly and Annual Tax Compliance: Offering end-to-end support for both Monthly and Annual Tax Compliance services, ensuring that you meet your obligations under the Indonesian tax regulation framework.
• Indonesia Tax Advisory: providing comprehensive Indonesian Local Tax Advisory services, we offer personalized guidance, ensuring that our advisory services are both practical and aligned with your goals.
• Tax Dispute and Dispute Resolution: Providing professional yet approachable guidance through Tax Audit, Tax Objection, Tax Appeals, Tax Lawsuit, and Tax Judicial Reviews, delivering peace of mind during complex tax matters.

Tailored Legal Strategies for Businesses

Every business is unique, and we offer customized tax compliance and audit strategies tailored to your industry and financial structure.

“DISCLAIMER: This content is for general informational purposes only and is not a substitute for professional advice.”