Effects of the Global Minimum Tax on Income Tax Incentive Framework in Indonesia

In this article, the authors analyse Indonesia’s tax incentives to lure investments and its commitment to adopt the GMT. Such adoption could potentially reduce a company’s effective tax rate to under 15%, possibly diverting revenue from Indonesia to other jurisdictions. The article suggests that the GMT’s introduction in Indonesia will influence various tax incentives, primarily those based on income, including tax holidays, tax allowances, super tax deductions, discounted rates and regional development incentives. Post-GMT, the government plans to introduce the qualified domestic minimum top-up tax to safeguard national revenue during GMT’s roll-out and the qualified refundable tax credit to maintain Indonesia’s competitive investment environment following GMT’s implementation.