Rosan Anticipates Impact of Global Minimum Tax on Investor Incentives

JAKARTA, investortrust.id – The government is working on new incetives for attracting foreign investment as looming implementation of the global minimum tax, or GMT, would likely undermine Indonesia's current investor incentive policies that heavily rely on tax cuts. 

Minister of Investment and Downstreaming/Head of the Investment Coordinating Board (BKPM) Rosan Roeslani GMT is implemented, tax holidays would no longer be a feasible form of incentive.

The tax holiday policy, under which certain investors do not have to pay taxes for between five and 20 years, has been a cornerstone of the Ministry of Investment and Downstream Industry's approach to attracting foreign investors.

"We're in talks about what the implications of GMT would be and how we can provide alternative incentives," Rosan said at IDN Headquarters in Jakarta on Wednesday, January 15, 2025.

While Rosan refrained from providing specific details about GMT deliberations, he emphasized that the government is exploring non-fiscal incentives to attract investors.

Currently, some countries have adopted a GMT rate of 15%. For Indonesia, this policy could influence existing fiscal tools, such as tax allowances and tax holidays, managed by the Ministry of Finance.

The discussion on GMT has gained traction as Indonesia seeks to join the Organisation for Economic Co-operation and Development (OECD). GMT is part of the OECD’s Pillar Two framework, designed to ensure multinational corporations pay a minimum level of tax regardless of their operational jurisdictions.

GMT mandates that domestic multinational companies earning income abroad pay a minimum tax rate. This policy aims to curb tax avoidance and safeguard revenues for countries where companies operate.

Ahead of GMT implementation, Finance Minister Sri Mulyani Indrawati signed Regulation No. 69 of 2024, extending the tax holiday policy until the end of 2025. The regulation outlines a 50% corporate income tax reduction for investments between Rp 100 billion and Rp 500 billion, and a 100% tax reduction for investments exceeding Rp 500 billion.

Since November 2024, the Coordinating Ministry for Economic Affairs has been working to match corporate data with GMT criteria. At that time, the Ministry of Investment and Downstream Industry assured “adjustments” for tax holiday beneficiaries to align with GMT regulations in Indonesia.