Frequently Asked Questions

On 11 September 2025, the Ministry of Industry of the Republic of Indonesia (MOI) issued MOI Regulation No. 35 of 2025 concerning Provisions and Procedures for Certification of Domestic Component Levels (Tingkat Komponen Dalam Negeri, TKDN) and Company Utilisation Point Ratings (Bobot Manfaat Perusahaan, BMP). This regulation will take effect on 11 December 2025, replacing the previous framework under MOI Regulation No. 16/2011 and MOI Regulation No. 46/2022.

The new regulation seeks to enhance Indonesia’s industrial competitiveness by streamlining the domestic-content certification process and introducing incentive-based scoring for companies that contribute to local development. It also broadens the scope to cover industrial services and mixed goods-service activities. By strengthening verification and extending the validity of certificates to five years, MOI 35/2025 aligns Indonesia’s domestic-content policies with the broader industrial roadmap under Presidential Regulation No. 74/2022 on National Industry Development Policy.

Impact on Businesses

The enactment of MOI Regulation No. 35 of 2025 significantly transforms Indonesia’s industrial compliance landscape. It expands regulatory obligations while simultaneously introducing new avenues for competitive advantage through an incentive-based scoring system. Both domestic and foreign enterprises engaged in manufacturing, services, or mixed-sector operations are expected to be impacted. Moreover, the regulation not only redefines the methodology for calculating domestic content but also reshapes the way companies demonstrate and maintain compliance throughout their business activities.

1. Mandatory Certification

All entities supplying goods or industrial services to the government, state-owned enterprises (SOEs), or projects financed by public funds are now required to possess valid TKDN and BMP certificates in accordance with MOI 35/2025. Without these certifications, companies will be ineligible to participate in public procurement or industrial tenders. This requirement compels businesses to engage accredited verification institutions (Lembaga Verifikasi Independen or LVI) to ensure their documentation, production data, and supplier inputs accurately reflect domestic-content values. Non-compliance may result in exclusion from future government projects or administrative sanctions.

2. Cost-Structure Adjustments

The new calculation formula (materials 75 %, labour 10 %, and overhead 15 %) mandates companies to restructure their cost composition and reassess the origin of key production inputs. Manufacturers must enhance local sourcing, evaluate their supplier mix, and document each domestic component precisely. Companies dependent on imported materials face increased pressure to localise supply chains or engage local partners to sustain competitive TKDN scores. Failure to optimise cost structures could reduce their domestic-content percentage, jeopardising procurement eligibility or incentive opportunities.

3. Incentive Opportunities

MOI 35/2025 introduces a BMP incentive mechanism, rewarding companies that contribute to Indonesia’s industrial ecosystem through research and development, Industry 4.0 adoption, technology transfer, environmental sustainability, and workforce localisation. Firms meeting these qualitative benchmarks may gain additional BMP points—potentially improving their classification and enhancing their standing in government procurement evaluations. This policy underscores Indonesia’s strategic transition from a protectionist approach toward value-added localization, fostering innovation-driven investments rather than mere assembly-based operations.

4. Transitional Risks

While TKDN certificates issued under the previous regulations will remain valid until their respective expiration dates, the transition period nonetheless presents notable compliance challenges. Accordingly, companies currently in the process of certification or renewal must ensure that their submissions fully adhere to the revised provisions prior to 11 December 2025. Any inconsistencies in calculation methodologies, documentation, or procedural compliance may lead to potential rejection or processing delays. Therefore, businesses are strongly encouraged to conduct internal compliance audits, identify affected product lines, and engage proactively with verification institutions to facilitate a smooth transition under the new regulatory framework.

5. Strategic Planning

For foreign-invested manufacturers (PT PMA) and multinational suppliers, the regulation necessitates a well-planned localisation strategy. Companies must carefully identify which stages of production can be relocated onshore, reinforce collaborations with Indonesian vendors, and establish transparent, traceable documentation systems. Furthermore, this requirement is particularly crucial in sectors such as electronics, automotive, energy, and infrastructure, where eligibility for projects often hinges on compliance with local-content thresholds. By proactively aligning with these new obligations, companies can preserve market access and enhance their reputation as compliant and locally integrated participants within Indonesia’s industrial landscape.

Key Changes

The enactment of MOI Regulation No. 35 of 2025 marks one of the most significant and comprehensive reforms to Indonesia’s local-content framework in more than a decade. This regulation consolidates previously fragmented ministerial provisions and harmonizes both quantitative (TKDN) and qualitative (BMP) assessments into a single, verifiable system. Moreover, the updated framework is designed to enhance accuracy, promote fairness, and ensure greater policy consistency across all industrial sectors.

1. Scope and Applicability

Under Article 3 of MOI 35/2025, the regulation applies to:

• Goods produced domestically through manufacturing or assembly processes within Indonesia.
• Industrial services, a newly defined category in Attachment III that covers technical, engineering, installation, maintenance, and related industrial support services.
• Mixed goods-services activities, where both tangible products and industrial services are offered together (e.g., turnkey EPC contracts).

This broader scope guarantees that industrial services previously excluded under the 2011 and 2022 regulatory frameworks are now encompassed within the domestic-content certification regime. This development underscores the government’s acknowledgment of the vital role that industrial services play as a key driver of national industrial value creation.

Furthermore, sector-specific regulations such as those governing medical devices, electronics, and automotive components will remain in force but must be harmonized with the overarching principles established under MOI Regulation No. 35 of 2025. Accordingly, companies operating within these specialized sectors are required to comply with both the sectoral and general TKDN/BMP provisions to ensure full regulatory alignment and prevent compliance gaps.

2. New Procedures and Calculation Requirements

MOI 35/2025 refines calculation methodologies for greater transparency and introduces a digitalized certification process integrated through the National Industrial Information System (SIINas). The new procedures are summarised below:

The integration of SIINas represents a significant procedural advancement, enhancing traceability and strengthening coordination among relevant government agencies. Furthermore, it allows the Ministry of Industry to effectively monitor compliance trends and ensure data consistency at the national level in real time.

3. Sanctions and Compliance Oversight

MOI 35/2025 introduces a more structured compliance-enforcement mechanism compared with the previous regime.
Administrative sanctions are now explicitly categorized as follows:

• Written Warning: Issued for minor reporting errors or late submissions.
• Temporary Suspension: Imposed when the company fails to provide supporting data or verification documents.
• Revocation and Blacklisting: Applied to companies found submitting false information or manipulating TKDN data; blacklisted entities are prohibited from reapplying for a defined period.

The verification process will be carried out by Independent Verification Institutions (Lembaga Verifikasi Independen – LVI) accredited by the Ministry of Industry. These institutions are responsible for reviewing accounting records, production data, and supplier documentation to ensure compliance with applicable standards. Accordingly, businesses are advised to maintain comprehensive audit trails covering material sourcing, labour expenditures, and local vendor transactions to accurately substantiate their declared domestic-content percentages.

In addition, LVIs will conduct post-certification monitoring throughout the five-year validity period to ensure sustained compliance. Should any inconsistencies arise between the reported and actual TKDN values, such discrepancies may result in the suspension or revocation of certification. Ultimately, this continuous audit mechanism signifies a strategic policy shift from a one-time certification process toward a dynamic, ongoing compliance framework.

4. Transitional Provisions

To ensure regulatory continuity, MOI 35/2025 provides transitional rules as follows:

1. Existing Certificates Remain Valid: TKDN and BMP certificates that were issued under previous regulations, namely MOI Regulation No. 16/2011, MOI Regulation No. 46/2022, or applicable sectoral decrees, will continue to be valid until their respective expiration dates.
2. Pending Applications: Any applications submitted prior to 11 December 2025 that have not yet received approval must be revised to comply with the updated calculation methodology and documentation requirements set forth under the new regulation.
3. Ongoing Projects: For government procurement or industrial projects that are already underway, the TKDN values established under the previous regulatory framework may remain applicable, unless the governing contract expressly requires adherence to the updated provisions.
4. Grace Period: The MOI provides a three-month transition window from September to December 2025 for companies to update documentation, review cost structures, and align internal policies.
5. Future Harmonization: The MOI plans to issue technical guidelines and possibly ministerial decrees to harmonize sector-specific local-content regulations (such as those in energy, construction, and telecommunications) with the new framework.

Businesses must use this transitional period proactively. Failure to update internal records or supplier declarations could result in non-recognition of TKDN/BMP values and loss of eligibility for public-procurement or incentive programs.

READ MORE:

• Understanding the Difference Between Board of Directors and Board of Commissioners in Indonesia
• Risk-Based Business Licensing in Indonesia: BKPM Regulation No. 5 of 2025 Consolidates the 2021 Regime

What to Expect

Moving forward, businesses should expect the issuance of implementing regulations and detailed technical guidelines to provide further clarity on TKDN calculations, verification procedures, and sector-specific scoring systems. In addition, the Ministry of Industry (MOI) is anticipated to enhance the integration of SIINas by incorporating digital verification through accredited LVIs, thereby improving transparency, streamlining processes, and minimizing administrative delays.

In line with the new framework, government and SOE procurement policies are expected to be revised to reflect the updated TKDN and BMP thresholds. As a result, companies should proactively review their supplier certifications, realign local-content targets, and maintain comprehensive, traceable documentation. Furthermore, with increased audits and verification processes anticipated in 2026, early preparation and strong compliance readiness will be essential to ensure continued eligibility and operational stability.

Administrative Sanctions and Audit Mechanism

Under MOI Regulation No. 35 of 2025, the enforcement framework has been significantly strengthened to enhance compliance oversight. The Ministry of Industry (MOI) is now vested with broader authority to conduct verification, audits, and impose sanctions on entities that fail to meet TKDN (Domestic Component Level) and BMP (Company Utilization Points) requirements. Moreover, in contrast to the previous regime that primarily focused on pre-certification reviews, the new regulation establishes a continuous compliance and audit mechanism aimed at ensuring data integrity, promoting transparency, and preventing potential manipulation.

Tiered Sanction Structure

Article 33 of MOI 35/2025 sets out a three-tier administrative-sanction system proportionate to the nature and gravity of non-compliance:

Moreover, sanctions may be imposed cumulatively when violations persist or occur across multiple product lines. Consequently, companies placed on the government’s blacklist are prohibited from reapplying for TKDN/BMP certification throughout the sanction period, thereby substantially restricting their ability to participate in government procurement processes and industrial licensing programs.

International and Investment Implications

For foreign investors, MOI 35/2025 signals Indonesia’s commitment to balancing protectionism with transparency. The inclusion of incentives for R&D, sustainability, and Industry 4.0 adoption demonstrates a policy shift from pure localization to innovation-driven competitiveness.

However, global manufacturers must carefully assess compliance obligations and localization ratios in light of bilateral investment treaties and WTO-consistency concerns. Non-compliance may result in disqualification from public procurement or future industrial incentives. For multinational joint ventures, early integration of TKDN/BMP strategy into operational planning will be essential.

READ MORE:

• Land Dispute Litigation in Indonesia: Title, Possession & Legal Remedies
• Unlocking Indonesia Oil and Gas Potential: Cooperation Schemes under MoEMR Reg. 14/2025

Practical Commentary from Kusuma & Partners Law Firm

Based on our analysis, MOI Regulation No. 35 of 2025 constitutes one of the most extensive reforms in Indonesia’s local-content policy over the past decade. Furthermore, it establishes clear, performance-based incentives that promote innovation, domestic capital investment, and industrial participation, while simultaneously reinforcing compliance and governance standards.

The regulation achieves a balanced approach, promoting domestic manufacturing while preserving Indonesia’s appeal to foreign investors. However, businesses should note that the enhanced audit and documentation standards will make compliance more demanding. Early preparation, thorough supplier assessment, and timely consultation with legal advisors are essential to secure and maintain certification effectively

Conclusion

MOI 35/2025 marks a significant shift in Indonesia’s domestic-content policy framework. It modernizes calculation methods, digitalizes certification, extends validity, and introduces incentive-based scoring. As it becomes effective on 11 December 2025, companies must immediately review their TKDN/BMP status, supplier structure, and documentation readiness.

By taking proactive steps to adapt early, businesses can not only minimize potential compliance risks but also strategically position themselves to gain from improved procurement opportunities and government incentives linked to local-content performance.

How We Can Help

At Kusuma & Partners, we assist clients in navigating Indonesia’s evolving regulatory landscape with a focus on legal compliance, risk management, and strategic advisory services. Our multidisciplinary team provides end-to-end legal support to help businesses remain compliant while identifying opportunities within new regulatory frameworks.

Our services include:

• Regulatory and Compliance Advisory – Interpreting and implementing new Indonesian laws and ministerial regulations across industry sectors.
• Licensing and Government Liaison – Assisting in securing, renewing, and maintaining business licenses and regulatory approvals with relevant ministries and authorities.
• Corporate Governance and Risk Assessment – Reviewing internal policies, contracts, and operational frameworks to ensure alignment with current legal obligations.
• Legal Due Diligence and Audit Support – Conducting compliance audits and advising on remediation strategies to mitigate potential exposure or sanctions.

Our goal is to help companies anticipate regulatory changes, strengthen internal compliance systems, and maintain legal integrity in all aspects of business operations.

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.”

The Investment Coordinating Board (BKPM) has enacted Regulation No. 5 of 2025 on the Implementation of Risk-Based Business Licensing through the Online Single Submission (OSS) System, effective 1 November 2025. This new regulation consolidates and refines various prior implementing rules under Government Regulation No. 5 of 2021 on Risk-Based Business Licensing (“GR 5/2021”).

The issuance of BKPM Regulation 5/2025 is closely aligned with the amendments introduced under Law No. 6 of 2023 on Job Creation, ensuring uniformity across Indonesia’s licensing ecosystem. It streamlines administrative overlaps, strengthens digital integration, and enhances policy coherence among government institutions.

Under the new regime, business activities are classified according to risk level—low, medium-low, medium-high, and high—based on Health, Safety, Environmental, and Resource (HSER) criteria. This risk-based approach continues Indonesia’s regulatory reform trajectory, prioritizing efficiency, transparency, and accountability in business licensing.

Impact on Businesses

BKPM Regulation 5/2025 affects all business actors, both local (PT PMDN) and foreign (PT PMA) operating through the OSS platform. The regulation aims to streamline licensing while imposing stricter data governance and compliance obligations.

Key Implications:

1. Risk Reclassification Across Industries
   Several industries have been reassessed under new HSER matrices. Certain sectors such as manufacturing, construction services, and renewable energy experience a downward adjustment (simpler licensing), while others such as waste management and data centers face higher compliance obligations.
2. Mandatory OSS Data Synchronization
   Businesses must confirm or update their OSS profiles within six months (by 30 April 2026) to maintain NIB validity. Failure to comply will automatically suspend licensing access.
3. Integrated Post-Licensing Monitoring
   Compliance monitoring is now fully centralized within OSS. Reporting obligations (e.g., environmental compliance, manpower data, investment realization) are electronically transmitted to relevant ministries.
4. Transition of Existing Licenses
   NIBs issued before 1 November 2025 remain valid until 31 May 2026, after which businesses must complete migration to OSS v.1.2.
5. Automated Administrative Sanctions
   BKPM has introduced digitalized sanctions ranging from electronic warnings to automatic revocations, minimizing human intervention and enforcing regulatory discipline.

These changes reflect a policy shift from procedural control to data-driven compliance, reinforcing Indonesia’s commitment to good governance and investor confidence.

Key Changes

1. Scope and Applicability

The new regulation extends OSS risk-based licensing coverage from 16 to 22 business sectors, adding:

• Fintech and digital payments;
• Data center and cloud services;
• Carbon trading and renewable projects;
• Digital marketplaces and creative industries.

All these sectors must undergo risk classification before operational approval. The automated risk mapping system ensures consistent application across ministries.

2. New Procedures and Requirements

Key procedural reforms include:

• Data Integration: OSS now cross-verifies corporate, tax, and environmental data across ministries.
• Technical Validation: Sector-specific permits (e.g., construction, energy) are automatically matched with risk category requirements.
• Digital Environmental Licensing: Companies must upload AMDAL/UKL-UPL documents using standardized templates approved by KLHK.
• Periodic Reporting: Business actors are now required to submit performance and compliance reports every six months via OSS.

3. Sanctions and Compliance

Administrative sanctions now follow a three-tier escalation process:

1. Warning Letter (7 days)
2. Suspension of NIB and portal access (30 days)
3. License Revocation if violations remain unresolved.

In addition, BKPM may publish sanctioned entities on the National Compliance Registry, potentially impacting reputation and financial standing.

4. Transitional Provisions

Businesses are encouraged to appoint dedicated licensing compliance officers to manage OSS updates and prevent administrative delays.

READ MORE:

• OSS RBA (Online Single Submission Risk-Based Approach) in Indonesia: How It Works and Why It Matters
• Business Licensing in Indonesia: What Foreign and Local Companies Must Know

What to Expect

BKPM and relevant ministries are expected to issue technical guidelines to operationalize the regulation:

• Circular Letter on Revised Risk Matrix (Q1 2026) to align sectoral classifications.
• Joint Regulation with KLHK and Kemenperin to coordinate environmental and industrial licensing.
• API Integration Manual for OSS v.1.2 to support system interoperability for large-scale businesses.

To prepare, companies should:

1. Conduct a licensing gap analysis to identify licenses requiring revalidation.
2. Ensure consistency between OSS data and MoLHR corporate registry.
3. Update environmental documentation in line with risk-based thresholds.
4. Establish internal monitoring systems to ensure timely reporting.
5. Seek professional legal assistance to interpret sector-specific obligations.

This transition marks Indonesia’s continued commitment to regulatory modernization and the creation of a predictable, investment-friendly business environment.

Practical Commentary from Kusuma & Partners Law Firm

From our professional perspective, BKPM Regulation 5/2025 is a pivotal reform toward a data-integrated and risk-based regulatory framework. By reducing redundancy and enhancing accountability, this regulation will significantly improve the ease of doing business and reduce corruption risk associated with manual approvals.

However, businesses must remain vigilant during the transition phase. The short compliance window and mandatory data accuracy standards will likely pose operational challenges, particularly for companies with multiple subsidiaries or cross-sector activities.

To mitigate these risks, investors should adopt a compliance-by-design approach, integrating OSS obligations into corporate governance, and appointing dedicated personnel to oversee periodic reporting and license renewals. Over time, this digital framework will make Indonesia’s licensing system more transparent, predictable, and investor-oriented.

READ MORE:

• Shares Purchase Agreement (SPA) Under Indonesian Law
• Key Post-Incorporation Compliance for Company in Indonesia

Conclusion

BKPM Regulation No. 5 of 2025 represents Indonesia’s most comprehensive step toward a unified and transparent Risk-Based Business Licensing in Indonesia. By consolidating multiple regulations into a single integrated framework, it simplifies administrative processes while elevating accountability through data centralization.

Businesses operating in Indonesia especially those in regulated sectors must act promptly to review their OSS profiles, synchronize licensing data, and ensure full compliance by the transition deadline.
Early adaptation will not only prevent administrative sanctions but also demonstrate good corporate governance in the eyes of regulators and investors.

In essence, this reform reinforces Indonesia’s ambition to become a digitally driven and compliance-oriented investment hub in ASEAN.

How We Can Help

For companies and investors seeking guidance on how to comply with BKPM Regulation No. 5 of 2025, we recommend the following actions:

• Conduct a comprehensive compliance audit covering all licenses, permits, and OSS data.
• Engage professional legal counsel to interpret sector-specific provisions and manage license migration.
• Align corporate data (shareholding, location, and KBLI codes) with OSS and MoLHR records.
• Implement digital compliance tools to automate periodic reporting.
• Stay updated on forthcoming circulars and ministerial guidelines related to OSS v.1.2 implementation.

For tailored advice or legal assistance on Risk-Based Business Licensing in Indonesia, please contact Kusuma & Partners Law Firm.

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 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.”