Effect of the Global Minimum Tax: Tax Holiday Replaced by Refundable Tax Credit
JAKARTA. The government will revise its fiscal incentive schemes for investment, moving away from tax allowances and tax holidays, and adopting a refundable tax credit mechanism instead.
According to oecdpillars.com, a refundable tax credit is a tax incentive scheme where tax credits are refunded in the form of cash or cash equivalents within a certain period.
The plan to implement the refundable tax credit scheme was announced by Mekar Satria Utama, Director of International Taxation at the Directorate General of Taxes.
As quoted from kontan.co.id, Mekar explained that due to the implementation of the global minimum tax, Indonesia can no longer continue offering tax exemptions such as tax holidays.
Under the global minimum tax rules, every covered multinational enterprise is required to pay at least 15% in tax. If not, the company will be subject to an additional Top-Up Tax.
In general, there are three mechanisms for applying this additional tax, namely the Income Inclusion Rule (IIR), the Undertaxed Payment Rule (UTPR), and
Domestic Minimum Top-up Tax (DMTT)
Indonesia has already issued Minister of Finance Regulation (PMK) No. 136 of 2024, which governs the global minimum tax.
“Now, multinational companies around the world, regardless of where they operate, must pay at least 15% in global taxes,” Mekar explained.
Moreover, as of August 18, 2025, the OECD has designated PMK No. 136/2024 as qualified. This means Indonesia is officially authorized to impose additional taxes under the IIR and DMTT provisions.
