Government to Revise Merger and Acquisition Tax Rules, IDX Respons Positively

JAKARTA. The government is considering the possibility of revising tax regulations related to corporate actions such as mergers and acquisitions. This move is a response to the impact of high trade tariffs imposed by the United States during President Donald Trump's administration.

These tariffs have put pressure on many companies, prompting the government to consider adjusting tax regulations so that mergers and acquisitions do not become an additional burden for businesses.

Minister of Finance Sri Mulyani Indrawati acknowledged that corporate actions like mergers and acquisitions have often been hindered by tax consequences, especially for businesses directly affected by those trade policies.

“We’ve received feedback that in situations like this, some companies may need to move quickly through mergers or acquisitions, but the process is often held back by policies due to tax implications,” said Sri Mulyani, as quoted by CNBC Indonesia on Thursday (10/4).

She added that the government is open to reviewing tax aspects to ensure business consolidation processes are more adaptive to economic challenges. “We are very open to reviewing tax aspects so that companies needing to carry out mergers and acquisitions can be much more agile,” she emphasized.

Existing Tax Provisions

Currently, tax regulations related to mergers and acquisitions are governed by Article 4 of the Income Tax Law (UU PPh), which states that gains from liquidation, mergers, consolidations, spin-offs, or business takeovers are considered taxable income.

In addition, the Ministry of Finance Regulation (PMK) Number 43/PMK.03/2008 allows taxpayers involved in mergers to use book value as the basis for calculation, both in business mergers and consolidations. However, this provision is considered insufficient to fully support business flexibility in facing economic pressures.

READ: Legal and Tax Aspects of Acquisitions and Mergers

IDX Response

President Director of the Indonesia Stock Exchange (IDX), Iman Rachman, welcomed the government’s plan, noting that the relaxation of tax rules on mergers and acquisitions could boost capital market activity.

He stated that while there has been no formal request for input on the revision, the implementation of such a policy would likely have a positive impact, potentially increasing transaction volumes, as quoted by Kontan.co.id on Tuesday (15/4).

With the proposed revision, business consolidation processes in Indonesia are expected to become more efficient and adaptive. The government is also seen as taking a more serious approach in fostering a business ecosystem that supports economic growth and attracts investment amid global challenges. (KEN)