A Simple Guide to Understanding Indonesia’s Global Minimum Tax

Indonesia has issued the Global Minimum Tax (GMT) rules, which will apply starting from the 2025 fiscal year through MoF Regulation No. 136 of 2024.

The 226-page regulation is not only complex but also requires time to fully understand its context.

In general, the GMT rules adopt almost all provisions from the OECD’s Pillar 2 Reports. However, several specific provisions apply to taxpayers in Indonesia.

This raises the question: how can we more easily understand the implementation of the Global Minimum Tax in Indonesia?

There are eight practical steps to understanding the global minimum tax in Indonesia, as formulated by MUC Consulting.

1. Identify whether the company is part of a multinational enterprise (MNE) group. An MNE is a company operating in two or more different countries.
2. Determine the constituent entities or entities covered within the MNE group.
3. Calculate whether the group meets the revenue threshold of EUR 750 million or more.
4. Assess whether safe harbour rules can be applied in calculating the effective tax rate. Safe harbour provides temporary or permanent simplifications for certain MNEs so they do not need to perform the full, complex effective tax rate calculation.
5. Calculate the GloBE income, which is derived from adjusted profit calculations based on numerous adjustments under OECD guidance.
6. Calculate the adjusted covered taxes.
7. Calculate the effective tax rate (ETR).
8. Calculate any top-up tax liability, if applicable, including determining whether it is imposed through QDMTT, IIR, or UTPR, and identifying which entity must pay the top-up tax in the relevant tax jurisdiction.

To simplify the process, the government allows covered companies to perform only Steps 1–4 during the first three years of GMT implementation. This can be done by utilizing the temporary safe harbour.