Indonesia issues regulation to implement global minimum tax


woman accountant or banker using calculator in retro office.

JAKARTA: Indonesia's finance ministry said on Thursday (Jan 16) it had issued a regulation to implement the global minimum corporate tax at 15% effective from Jan 1, as part of an international push to limit tax competition between countries.

The largest economy in South-East Asia is among 140 countries which agreed on a landmark 2021 deal that allows governments to apply a top-up tax to the 15% level on any corporate profits booked in a country with a lower rate.

The tax, which is being shepherded by the Organisation for Economic Cooperation and Development (OECD), applies to multinational companies with an annual global turnover of more than 750 million euros (US$770 million).

"With this provision, tax avoidance practices such as through tax haven can be prevented. We welcome this agreement because it is very positive in creating a fairer global tax system," Febrio Kacaribu, the ministry's fiscal policy agency head, said in the statement.

To ensure the top-up measure did not affect investment, Febrio said tax incentives would be introduced for sectors that could drive growth, although no specifics were provided in the statement.

Jakarta has previously said it would extend a tax holiday policy for certain investments and add new incentives to soften the impact of the minimum corporate tax rate. - Reuters

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