A Year of GMT Rules in Indonesia: Implementation and Challenges

Normatively, Indonesia began implementing the Global Minimum Tax  (GMT) a year ago. However, from an operational perspective, the policy introduced under PMK 136/2024 continues to face challenges concerning clarity. 

The obligation to calculate a 15% Effective Tax Rate (ETR) has applied since fiscal year 2025. However, the guidelines that should serve as practical guidance for taxpayers are still unavailable. 

This is where the main implementation challenge lies. The issue is not policy commitment, but the readiness of technical regulations and the supporting ecosystem. 

GMT and the Shift in the Global Tax Landscape 

For more than a decade, international taxation has been undergoing its most significant transformation. The “race to the bottom” practice, where countries compete by offering low tax rates to attract foreign investment, is now challenged by GMT. 

Through the Global Anti-Base Erosion (GloBE) rules as part of Pillar Two of the Base Erosion and Profit Shifting (BEPS) 2.0 Project, participating countries have agreed to apply a GMT rate of 15%. 

The rules apply to multinational enterprise (MNE) groups with a certain level of consolidated revenue. GMT has effectively become the new normal in international taxation. 

In Indonesia, GMT was introduced through PMK 136/2024 and has been in effect since the fiscal year 2025. Meanwhile, the Subject-to-Tax Rule (STTR), which is treaty-based, is still awaiting implementation, although Indonesia signed the STTR Multilateral Instrument (MLI) in September 2024. 

Indonesia’s Fiscal Interest Behind GMT Adoption 

Indonesia’s adoption of GMT is not merely about following global trends. The government has a strong interest in the policy, particularly in strengthening fiscal revenue resilience. 

Without adopting GMT, Indonesia risks losing the right to collect Top-up Tax, which could instead be imposed by other jurisdictions through the Income Inclusion Rule (IIR) or the Undertaxed Payment Rule (UTPR). 

PMK 136/2024 provides the legal basis for Indonesia to collect Top-up Tax arising from ETRs below 15%, including through the Qualified Domestic Minimum Top-up Tax (QDMTT). 

This scheme ensures that potential revenue does not flow to other jurisdictions that are more prepared in terms of regulations. However, having a legal foundation alone is not sufficient without clear and practical implementation guidance. 

That said, the implementation of GMT in Indonesia is not without challenges. Several issues have emerged and require a swift government response. 

Technical Complexity and Administrative Burden 

In practice, GMT is highly technical and complex, not only for taxpayers but also for tax consultants. ETR calculations are no longer simple due to a jurisdictional blending approach that aggregates all entities within one country. 

Within a single jurisdiction, an MNE group may have dozens of entities. Yet, whether the ETR falls below or above 15% is determined on an aggregate basis, not per entity. 

The situation becomes more complex if a jurisdiction’s ETR falls below the minimum threshold. The Top-up Tax may then be allocated through three different mechanisms: QDMTT, IIR, or UTPR. Misunderstanding these mechanisms may lead to cross-border tax exposure and potential disputes in the future. 

Internal corporate readiness may also worsen the situation. Financial data quality, IT systems, and human resources are key factors. Errors in calculating ETR or GloBE Income may create not only fiscal consequences, but also reputational risks. 

The Absence of Technical Guidance 

Nearly one year after PMK 136/2024 was issued, detailed implementing regulations are still not available. At the same time, companies using the 2025 calendar year for bookkeeping purposes should begin the mandatory calculation of GMT. 

Several aspects are crucial: the format and procedures for filing GloBE, DMTT, and UTPR annual tax returns; the form and mechanism for submitting notifications; the working papers for calculating ETR and GloBE Income or Loss; and the reporting channel certainty, whether through the Coretax digital system or directly through certain tax offices. 

Without clear guidance, taxpayers are left to interpret highly technical global rules on their own. This is far from ideal in a modern tax compliance regime. 

Rethinking Tax Incentives 

GMT also challenges the relevance of traditional tax incentives such as tax holidays and tax allowances. For taxpayers within the GMT scope, if the incentives bring the ETR below 15%, the shortfall may ultimately be offset through Top-up Tax. 

As a result, the effectiveness of these incentives becomes limited because the maximum benefit may only reflect the difference between Indonesia’s corporate income tax rate of 22% and GMT’s 15%. 

This situation requires the government to redesign tax incentives to be compatible with GMT. Incentives should focus on genuinely reducing investment costs,for example, through non-tax subsidies or expenditure-based facilities without fiscally lowering the ETR. 

Accounting Implications and PSAK 212 Challenges 

Beyond taxation, GMT also affects financial reporting through Statement of Financial Accounting Standards (PSAK) 212. This standard requires transparent disclosure of Pillar Two tax exposure. However, a limited understanding of GMT among taxpayers and auditors increases the risk of inaccurate or inconsistent disclosures. 

This highlights the need for coordination between the tax authority, accounting standard regulators, and professional organizations. Without adequate guidance and outreach, GMT could shift from being an instrument of tax fairness to becoming a counter-productive administrative burden. 

The Importance of Collaboration 

The implementation of GMT through PMK 136/2024 represents a strategic step for Indonesia in protecting its tax base amid global tax reform. However, the success of this policy depends heavily on the readiness of technical rules and the supporting ecosystem. 

The government needs to promptly issue implementing regulations that provide administrative certainty and strengthen cross-sector education, including accounting aspects under PSAK 212, and the reformulation of tax incentives. Without these steps, GMT risks becoming a policy that is sound in principle but fragile in practice. 

Close collaboration between tax authorities, practitioners, and the business community will be key to ensuring that the transition to the GMT does not weaken Indonesia’s investment climate. For developing countries like Indonesia, this transition should be an opportunity to build a fairer, more transparent, and more sustainable tax system. 

Disclaimer! This article is a personal opinion and does not reflect the policies of the institution where the author works.