Tax Provisions on SOE Restructuring Amended, Use of Book Value Now Under Danantara’s Authority 

Minister of Finance Purbaya Yudhi Sadewa has updated the tax provisions related to the restructuring of State-Owned Enterprises (SOEs). The update was made through the issuance of Minister of Finance Regulation (PMK) Number 1 of 2026, which amended PMK Number 81 of 2024. 

The Government considered that the update was made to support the transformation of SOEs. The forms of restructuring include business mergers, consolidations, spin-offs, or acquisitions. 

Several updates were introduced. First, the expansion of the definition of SOEs. Second, the transfer of authority for approving certain detailed aspects of the restructuring process from the Ministry of SOEs to Danantara. Third, the time limit for business continuity of taxpayers transferring assets as a result of restructuring. 

Further Elaboration of the SOE Definition 

Under the latest regulation, effective as of 22 January 2026, the Government further elaborate the definition of SOEs, which is no longer based solely on capital ownership. 

An additional definition is introduced, namely that SOE may also be defined as a business entity in which the Republic of Indonesia holds special rights. 

However, PMK 1/2026 does not provide a detailed explanation of such special rights. 

Approval for the Use of Book Value 

In a restructuring, taxpayers are generally required to use market value in valuing their assets and liabilities. However, for income tax purposes, book value may be used with the approval of the Directorate General of Taxes (DGT). 

The use of book value is also permitted for SOE taxpayers receiving additional state capital participation, particularly related to the establishment of a parent or holding company. 

The use of book value is also allowed in the case of a business spin-off, provided that the spin-off is conducted no later than fiscal year 2021, the transfer of assets is carried out through a sale and purchase mechanism, and approval is obtained. 

Under PMK 1/2026, approval for an SOE restructuring is no longer under the authority of the Ministry of SOEs, but under the authority of BPI Danantara. 

Criteria for the Use of Book Value 

In general, two categories of taxpayers may conduct a business acquisition using book value. 

First, the acquisition of part or all assets and liabilities of a permanent establishment in the banking sector by a domestic company with share capital, after which the permanent establishment must be dissolved. 

Second, the acquisition of a domestic corporate taxpayer through the transfer of share ownership to another domestic corporate taxpayer. Several requirements must be met, namely: 

• The number of shares transferred exceeds 50% or provides the ability to determine the management of the transferred company by any means. 
• If the acquired entity is a public company, the transfer must comply with capital market regulations. 
• The acquisition or restructuring must be conducted no later than the beginning of fiscal year 2021. 
• The transfer of assets must be carried out through a sale and purchase process, and the restructuring must obtain approval from BPI Danantara. 

Business Continuity Period 

PMK 1/2026 also shortens the required business continuity period for companies undergoing restructuring. 

Previously, companies transferring assets or liabilities were required to continue operating for at least five years. Under the new regulation, this requirement is reduced to four years from the effective date of the restructuring. 

Similarly, the company receiving the transferred assets must continue operating for at least four years from the restructuring date. 

Recalculation Using Market Value 

PMK 1/2026 also relaxes the time requirement for companies conducting restructuring using book value. 

Previously, companies conducting restructuring, whether through acquisition or merger, were required to operate for at least five years. Under the new regulation, this period is reduced to four years from the effective date of the restructuring. 

This means that, while restructuring using book value previously required a minimum operating period of five years, the new regulation allows faster process, namely after four years of operation. The Director General of Taxes also has the authority to make an evaluation. 

Through PMK 1/2026, the government also authorize the Director General of Taxes and the Director General of Economic and Fiscal Strategy to evaluate the use of book value. 

Such evaluation is carried out on behalf of the Minister of Finance and may be conducted within a maximum period of three years from the effective date of PMK 1/2026. (ASP/CIN/NAT)