Frequently Asked Questions

Coal export regulation Indonesia 2026 is now one of the most important legal issues for mining companies. Indonesia remains a major global coal exporter. However, the regulatory landscape is becoming more controlled, more technical, and more enforcement-driven.

For mining companies, this creates real business pressure. A contract that looked safe last year may now need urgent legal review. An export plan that worked before may now face reporting, licensing, foreign exchange, customs, and state-control issues.

Therefore, coal exporters must treat 2026 as a compliance turning point. Coal export is no longer only a commercial transaction. It is also a regulated activity involving several government authorities.

Coal export touches mining law, trade law, customs law, foreign exchange rules, tax obligations, and corporate governance. As a result, one compliance failure may trigger several legal consequences.

These consequences may include shipment delays, license suspension, administrative penalties, tax exposure, and commercial disputes with buyers. This is why coal export regulation Indonesia 2026 should become a board-level risk issue for mining companies.

The New Regulation: Government Regulation No. 24 of 2026

The key new regulation discussed in this article is Government Regulation No. 24 of 2026 on Governance of Strategic Natural Resources Commodity Exports. This regulation is understood to introduce a more centralized export governance model for strategic natural resources commodities, including coal.

Under this new framework, coal exports are expected to be routed through a government-appointed state-owned enterprise. Based on recent public reporting, the appointed entity is PT Danantara Sumberdaya Indonesia, commonly referred to as DSI.

This development is highly important for coal exporters. It may affect export contract structures, pricing, invoicing, reporting, payment flow, and settlement arrangements.

In practical terms, coal export regulation Indonesia 2026 should now be read together with the new centralized export governance policy. Mining companies should not only review their permits. They should also assess whether their commercial structure remains workable under this new regulatory direction.

Understanding Coal Export Regulation Indonesia 2026

Coal export regulation Indonesia 2026 refers to the evolving rules governing coal export activities from Indonesia. These rules include mining permits, export approvals, customs declarations, domestic supply obligations, benchmark pricing, royalties, tax reporting, and export proceeds retention.

In practical terms, coal export compliance is not handled by one regulation only. It is built from several overlapping legal regimes. This is where many companies make mistakes.

Some companies assume that export compliance only means preparing shipping documents. In reality, the legal review must begin much earlier.

It should start from the mining license, production plan, coal quality, buyer identity, pricing formula, and domestic market obligation. After that, the company must also review customs, banking, payment, tax, and post-export reporting.

1. A Shift from Export Licensing to State-Supervised Export Control

Indonesia’s 2026 policy direction shows a move toward stronger state supervision over strategic commodity exports. Coal exporters should expect closer monitoring of export transactions, pricing, payment flows, and buyer arrangements.

This is not a small administrative change. It may affect how coal is sold, invoiced, priced, and settled.

Therefore, mining companies should not wait until the shipment stage. They should assess whether their existing export contracts remain workable.

They should also check whether their internal approval process can adapt to new reporting channels. In this context, coal export regulation Indonesia 2026 creates legal, financial, and operational risks at the same time.

2. Why the Government Is Tightening Coal Export Oversight

The policy reason is clear. Coal is a strategic natural resource. It contributes to state revenue, foreign exchange reserves, employment, regional development, and energy security.

The government also wants to reduce under-pricing, underreporting, and leakage in strategic commodity exports. For companies, this means compliance will become more evidence-based.

Authorities may ask whether the export price reflects the correct benchmark. They may also ask whether foreign exchange proceeds entered the Indonesian financial system.

In addition, they may check whether the exporter fulfilled domestic supply obligations. These issues are now connected and must be managed together.

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Key Legal Framework for Coal Exporters in Indonesia

Coal exporters must understand the broader Indonesian legal framework. The main framework includes mining law, implementing regulations, licensing rules, customs rules, trade regulations, tax regulations, foreign exchange proceeds rules, and the new centralized export governance regulation.

Each rule has a different function. However, they often meet inside one export transaction.

For example, a shipment may be commercially valid under a coal sales contract. However, it may still face legal problems if the exporter fails to file proper customs documents.

The same shipment may also create issues if the coal price does not match the applicable benchmark. Therefore, legal compliance must be integrated into commercial planning.

1. Mining Law and Business Licensing Requirements

Coal mining companies must hold proper mining business licenses. These may include IUP, IUPK, or other relevant approvals under Indonesian mining law.

The company must also comply with its approved work plan and budget. This includes production, sales, environmental, reclamation, and reporting obligations.

Export activity should be aligned with the company’s mining license scope. A company should confirm whether it may sell coal directly, appoint a trader, or use another commercial structure.

This is important because an incorrect structure may trigger licensing risk. It may also raise questions during audit, due diligence, or dispute proceedings.

2. Customs Export Procedures and PEB Compliance

Coal export requires proper customs procedures. Exporters must prepare and submit the Pemberitahuan Ekspor Barang, commonly known as PEB.

They must also ensure the accuracy of commodity description, volume, quality, value, destination, HS code, and supporting documents.

Customs compliance is not a formality. Incorrect export declarations may create administrative sanctions.

In serious cases, false or misleading documents may create criminal exposure. Therefore, mining companies should keep strong records.

These records should include contracts, invoices, surveyor reports, shipping documents, tax records, proof of DHE SDA placement, and payment evidence.

3. DHE SDA and Government Regulation No. 8 of 2025

Coal exporters must also comply with Government Regulation No. 8 of 2025, which amends Government Regulation No. 36 of 2023 on foreign exchange proceeds from natural resources exports.

This framework is commonly known as DHE SDA. It regulates the placement and retention of export proceeds from natural resources activities within Indonesia’s financial system.

For coal exporters, DHE SDA is a core compliance issue. It may affect cash flow, loan repayment, dividend planning, and group treasury arrangements.

If a mining company has foreign currency debt, the timing and location of export proceeds become critical. Therefore, legal, finance, and treasury teams must coordinate before each major export transaction.

State-Controlled Export Transition: What Mining Companies Must Watch

The state-controlled export transition is one of the most sensitive developments in coal export regulation Indonesia 2026. Mining companies should monitor how reporting, contract administration, invoicing, and settlement mechanisms will work.

Based on the current transition framework, exporters are expected to report export activities during the transition period. Existing export permits may remain valid until their expiry or until the end of 2026, depending on the applicable rule.

The key concern is whether existing commercial models can continue without amendment. For coal producers, the transition may affect relationships with traders, affiliates, foreign buyers, and lenders.

For traders, the risk may be greater. Their role may be reviewed under a more centralized export model. Therefore, companies must examine whether their function remains legally and commercially defensible.

1. Reporting Obligations During the Transition Period

During the transition period, exporters may need to report export activities to the Trade Minister and/or the appointed state firm. This requirement should be treated seriously.

Even if existing licenses remain valid, the reporting layer can still create new compliance risk. Companies should not underestimate this obligation.

A reporting failure may raise red flags. It may also delay future approvals or create questions during audits.

Therefore, mining companies should prepare internal reporting protocols. They should designate responsible officers, document deadlines, and maintain proof of submission.

This is a basic but important compliance control. It may also protect the company during future regulatory inspection or commercial disputes.

2. Potential Impact on Existing Export Contracts

Existing coal export contracts may face uncertainty. Buyers may ask whether deliveries will continue under the same structure.

Sellers may ask whether they can still invoice directly. Lenders may ask whether proceeds will remain available for repayment.

These questions are not theoretical. They affect revenue recognition, payment terms, tax treatment, and default risk.

Therefore, companies should review long-term contracts carefully. They should identify clauses on change in law, force majeure, hardship, payment currency, delivery obligations, regulatory approvals, and export permit transfer.

Pricing, HBA, Royalties, and Export Duty Risks

Coal pricing is a major compliance issue. Indonesia uses benchmark coal prices, including Harga Batubara Acuan or HBA.

These benchmarks may influence commercial pricing, royalty calculation, tax review, and regulatory assessment.

In 2026, pricing risk may increase because the government is focused on strategic commodity value capture. If the export price is too low, authorities may question the transaction.

If the buyer is an affiliate, the risk becomes higher. Therefore, companies need strong pricing files and commercial justification.

1. Coal Benchmark Price and Transfer Pricing Concerns

Coal exporters should compare their contract price with the relevant benchmark and market conditions. They should also document coal specifications, calorific value, sulfur, ash, moisture, freight terms, and timing.

These factors may explain price differences. Without proper documentation, the company may face questions from tax, customs, or mining authorities.

For related-party transactions, transfer pricing risk must be reviewed carefully. Tax authorities may examine whether the price reflects an arm’s-length arrangement.

Therefore, mining companies should keep transfer pricing documentation, benchmark analysis, and board approval records. This is especially important for integrated mining groups.

2. Possible Export Duty Exposure in 2026

Export duty risk should also be monitored. If coal export duties are introduced or revised, mining companies must assess the financial impact.

Even a small duty rate may significantly affect margins. This is especially true for high-volume exporters.

Companies should update their financial models. They should also review whether contracts allow tax or duty pass-through.

If the contract is silent, the seller may bear the cost. This can create disputes with buyers.

Therefore, export duty clauses should be reviewed before renewal, amendment, or contract signing.

Domestic Market Obligation and Export Restrictions

Domestic Market Obligation, or DMO, remains a key issue for coal exporters. The government uses DMO to secure domestic coal supply.

This is especially important for electricity, industry, and national energy stability.

Exporters should never treat DMO as secondary. A strong export book does not excuse domestic supply failures.

If a company fails to meet DMO requirements, it may face export restrictions or administrative consequences. Therefore, export planning must be aligned with domestic allocation planning.

1. Why DMO Compliance Remains Critical

DMO compliance protects a company’s export continuity. It also reduces regulatory friction with the Ministry of Energy and Mineral Resources.

A mining company should track DMO volume, delivery schedule, buyer documentation, and proof of performance.

In addition, DMO compliance should be monitored at board level. It affects revenue, production planning, and risk management.

If domestic commitments are ignored, export activity may become vulnerable. This may weaken the company’s bargaining position with foreign buyers.

2. Risk of Suspension or Administrative Sanctions

Regulatory non-compliance may lead to administrative sanctions. These may include warnings, restrictions, suspension, freezing of export permits, or other measures under applicable law.

The exact sanction depends on the violation and authority involved.

However, the larger risk is business disruption. A delayed shipment may trigger contractual penalties.

A suspended export plan may affect cash flow. A compliance finding may also concern lenders and investors.

Therefore, prevention is usually cheaper than dispute resolution.

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Contractual Risks for Coal Sellers, Traders, and Buyers

Coal export contracts should be reviewed in light of coal export regulation Indonesia 2026. Standard clauses may no longer be enough.

Companies need clauses that address regulatory changes, government approvals, export restrictions, payment controls, currency issues, DHE SDA, and centralized export governance.

Contract drafting is now a risk management tool. It is not only a legal formality.

A well-drafted contract can reduce disputes when regulations change. It can also allocate costs, responsibilities, and timelines more clearly.

This is important for sellers, traders, buyers, lenders, and foreign investors.

1. Force Majeure, Change in Law, and Hardship Clauses

Many coal contracts include force majeure clauses. However, not every regulatory change qualifies as force majeure.

A company must check the wording carefully. Some clauses only cover impossibility.

Others cover delay, restriction, or economic hardship.

Change in law clauses may be more useful. They can allocate risk when new rules affect performance costs or legality.

Hardship clauses may also help when performance becomes excessively burdensome. Therefore, exporters should not rely on generic wording.

2. Payment Currency and Settlement Issues

Payment currency is a sensitive issue. Coal export contracts often use United States dollars.

However, foreign exchange proceeds rules may affect how funds are received, placed, retained, and used. This creates treasury and legal considerations.

Mining companies should review payment clauses, bank account clauses, lender requirements, and DHE SDA obligations together.

They should also confirm whether payment timing matches regulatory deadlines. This avoids unnecessary default risk.

It also helps management plan debt service, operational spending, and cross-border payment obligations.

Practical Compliance Checklist for Mining Companies

Mining companies should conduct a structured compliance review.

• First, review all mining licenses and approved work plans.
• Second, check DMO status and domestic supply records.
• Third, examine export contracts, buyer details, and trader arrangements.
• Fourth, review customs documents and PEB accuracy.
• Fifth, assess HBA, royalty, tax, and transfer pricing files.
• Sixth, review DHE SDA compliance and banking arrangements. Seventh, monitor the implementation of Government Regulation No. 24 of 2026 and related Trade Ministry technical regulations.
• Finally, prepare internal compliance reports for directors and commissioners.

This checklist should not be done once only. It should be repeated when regulations change, contracts are renewed, shipments increase, or new buyers are appointed.

In 2026, continuous monitoring is essential. This is the safest way to manage Coal Export Regulation Indonesia 2026.

Practical Commentary from Kusuma & Partners Law Firm

In our view, the biggest risk for coal companies in 2026 is not one single regulation. The real risk is regulatory overlap.

A company may comply with mining licensing rules but fail on DHE SDA. Another company may comply with customs but fail on pricing documentation.

A company may also have valid export permits but still face reporting or transition issues under the centralized export governance framework.

Therefore, coal exporters need an integrated legal review. The review should cover licensing, contracts, customs, tax, banking, DMO, DHE SDA, and dispute exposure.

It should also test whether existing contracts remain enforceable under the new policy environment. This is especially important for long-term supply contracts and related-party sales.

We also recommend that directors treat coal export compliance as a corporate governance issue. Directors are expected to act carefully, prudently, and in good faith.

If management ignores known compliance risks, the company may face avoidable losses. In serious cases, directors may also face internal accountability questions.

Conclusion

Coal export regulation Indonesia 2026 marks a major compliance turning point for Indonesia’s coal industry. Mining companies must now prepare for stronger export supervision, stricter foreign exchange controls, pricing scrutiny, and contractual uncertainty.

The new regulatory framework, including Government Regulation No. 24 of 2026, should be reviewed together with DHE SDA, customs, mining licensing, DMO, HBA, royalties, and tax rules.

The safest approach is proactive legal review. Companies should not wait for shipment delays, buyer disputes, or government findings.

Instead, they should review their contracts, licenses, customs process, DHE SDA compliance, DMO performance, and pricing documents now.

In a stricter regulatory environment, preparation is a commercial advantage. It helps companies protect revenue, maintain buyer confidence, and reduce legal exposure.

How We Can Help

Kusuma & Partners Law Firm assists mining companies, exporters, investors, and business owners with regulatory compliance, contract review, dispute prevention, and legal strategy in Indonesia.

On April 30^th 2026, the Indonesian Minister of Manpower issued Minister of Manpower Regulation No. 7 of 2026 on Outsourced Work (“Mom Regulation 7/2026”). The regulation was enacted as a follow-up to the Constitutional Court’s Decision No. 168/PUU-XXI/2023, which called for greater legal certainty in outsourcing arrangements and enhanced protection for outsourced workers.

Mom Regulation 7/2026 introduces a more restrictive framework for outsourcing practices in Indonesia. While outsourcing remains permissible, the regulation narrows the scope of work that may be outsourced and imposes additional compliance obligations on both service users and outsourcing service providers. As a result, companies operating in Indonesia should reassess their existing workforce structures and outsourcing arrangements to ensure compliance with the new regulatory requirements.

Restriction on Outsourceable Work

One of the most significant changes introduced by Mom Regulation 7/2026 is the limitation of outsourcing activities to specific supporting functions.

Under Article 3 of Mom Regulation 7/2026, outsourced work is generally limited to the following categories:

• cleaning services;
• catering services;
• security services;
• driver and employee transportation services;
• operational support services; and
• supporting services within the mining, oil and gas, geothermal, and electricity sectors.

This approach reflects the Government’s intention to distinguish more clearly between a company’s core business activities and supporting functions. Employers should therefore carefully evaluate whether any currently outsourced positions form part of their core business operations, as such arrangements could attract regulatory scrutiny.

Mandatory Outsourcing Agreement

MoM Regulation 7/2026 requires the user company and the outsourcing service provider to govern every outsourcing arrangement through a written outsourcing agreement.

The agreement must contain, at a minimum:

• the scope of outsourced work;
• the duration of the arrangement;
• the location where the outsourced workers will perform the work;
• the number of outsourced workers involved;
• provisions concerning the protection of workers’ rights; and
• the rights and obligations of each party.

This requirement emphasizes the importance of maintaining clear contractual documentation and allocating responsibilities appropriately between the parties. Companies should therefore review their existing outsourcing agreements to ensure compliance with the mandatory provisions prescribed by the regulation.

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Registration Requirement

Another notable compliance requirement under Mom Regulation 7/2026 is the obligation to register outsourcing agreements with the relevant manpower authority.

The outsourcing company must submit the outsourcing agreement for registration no later than three working days after its execution.

This requirement enhances governmental oversight of outsourcing practices and creates an additional administrative obligation that employers should incorporate into their internal compliance procedures. Failure to comply with registration requirements may expose businesses to regulatory findings during manpower inspections.

Strengthened Protection of Outsourced Workers

Mom Regulation 7/2026 reinforces the principle that outsourced workers must continue to receive the employment protections guaranteed under Indonesian labour laws.

Such protections include, among others:

• wages;
• overtime pay;
• working hours and rest periods;
• annual leave;
• occupational health and safety protections;
• social security benefits;
• religious holiday allowances (Tunjangan Hari Raya or THR); and
• statutory entitlements arising from the termination of employment.

Importantly, the regulation also requires user companies to ensure that outsourcing providers fulfil their obligations towards outsourced workers. This development indicates that companies may no longer rely solely on contractual arrangements with service providers to mitigate labour-related compliance risks.

Transitional Period

Recognizing that many businesses currently rely on outsourcing arrangements, Mom Regulation 7/2026 provides a transitional period for compliance.

Existing outsourcing agreements may remain effective until their expiration. Employers must adjust outsourcing arrangements that do not conform to the new requirements within the transition period stipulated by the regulation.

This transitional framework provides companies with an opportunity to conduct legal and operational reviews while minimizing disruption to ongoing business activities.

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Practical Commentary from Kusuma & Partners Law Firm

Given the significant changes introduced by Mom Regulation 7/2026, employers should consider undertaking a comprehensive review of their outsourcing practices.

Key action points may include:

• conducting a legal audit of existing outsourcing arrangements;
• identifying whether outsourced functions qualify as supporting activities under the new framework;
• reviewing and updating outsourcing agreements where necessary;
• assessing the compliance status of outsourcing service providers;
• strengthening monitoring mechanisms relating to workers’ rights and statutory benefits; and
• ensuring timely registration of outsourcing agreements with the relevant manpower authorities.

Employers that proactively address these issues can better manage legal risks and regulatory compliance obligations under the new outsourcing regime.

Conclusion

Mom Regulation 7/2026 marks a significant shift in Indonesia’s approach to outsourcing regulation. The Government limits the categories of work that companies may outsource and strengthens protections for outsourced workers to balance business flexibility with worker welfare and legal certainty.

Although the regulation does not eliminate outsourcing as a workforce management tool, it introduces a more structured and closely supervised framework. Companies that currently utilize outsourced labour should therefore take this opportunity to reassess their employment structures, contractual arrangements, and compliance procedures to ensure alignment with the evolving regulatory landscape.

As the implementation of Mom Regulation 7/2026 develops, further guidance and enforcement practices may provide additional clarity regarding the practical application of the new rules. In the meantime, businesses should remain vigilant and take proactive measures to mitigate potential legal and operational risks.

How We Can Help

Kusuma & Partners Law Firm assists companies in reviewing outsourcing structures, assessing permitted outsourced functions, revising outsourcing agreements, checking provider compliance, and preparing practical compliance strategies under MoM Regulation 7/2026. We also advise on employment risk, manpower inspections, worker rights issues, and restructuring options where existing outsourcing arrangements no longer comply with Indonesian law.

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:

Key Area	New Provision	Compliance Implication
Goods Calculation Formula	TKDN = (Direct Materials × 75%) + (Direct Labour × 10%) + (Factory Overhead × 15%)	Companies must provide detailed breakdowns of material origins, payroll composition, and overhead data supported by accounting records and supplier invoices.
Industrial Services Calculation	Weighted by local human-resource costs, tools, and local subcontractor participation.	Service providers must quantify local manpower usage and domestic outsourcing.
Mixed Goods-Services Formula	TKDN = (TKDN_goods × % goods value) + (TKDN_services × % services value).	EPC and integrated service providers must ensure proportionate documentation for each component.
Research & Development (R&D) Bonus	Up to 20% additional TKDN points granted to R&D-intensive manufacturers or those adopting Industry 4.0 technology.	Creates incentive for innovation-based localisation and technology transfer.
Certificate Validity	Extended from 3 years to 5 years.	Longer planning horizon, reduced renewal costs, but ongoing audit obligations.
Self-Declaration for Small Industries	Micro and small manufacturers may self-declare TKDN through SIINas, subject to random verification.	Encourages SME participation while maintaining auditability.
Digital Submission via SIINas	Centralized platform for registration, verification, and certificate issuance.	Streamlines process, reduces manual paperwork, and allows cross-ministry data tracking.

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.

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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:

Sanction Tier	Triggering Event	Legal Consequence
Written Warning	Minor procedural errors, delayed submission of documents, or non-material inconsistencies in TKDN calculation.	Formal notification requiring correction within a prescribed period (usually 14 working days).
Suspension of Certificate	Failure to provide supporting documents during verification, material discrepancy in declared TKDN values, or unrectified procedural breach after a warning.	Temporary suspension of TKDN/BMP certificate. The company is prohibited from using the certificate for tender or licensing purposes until rectified.
Revocation & Blacklisting	Intentional misrepresentation, falsified data, or proven manipulation of local-content figures.	Revocation of the certificate, public listing on the MOI blacklist for a defined period, and potential ineligibility for future certification.

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

Aspect	Previous Regime (GR 5/2021)	BKPM Regulation 5/2025
Transition Deadline	Undefined	31 May 2026
Data Accuracy	Manual updates permitted	Mandatory synchronization under OSS v.1.2
Environmental Licensing	Separate submission	Integrated within OSS
Sanctions	Sectoral discretion	Automated enforcement under BKPM authority

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.”