Indonesia – Tax Holiday Updates.
To enhance Indonesia’s economic growth, the Minister of Finance (MoF) issues new updates on tax holiday by issuing Minister of Finance Regulation No. 69 of 2024 (PMK 69). The key updates in PMK 69 are among others (i) adding a new criterion for tax holiday eligibility, i.e., investment in the new capital city, (ii) extension of the tax holiday deadline, and (iii) new regulation concerning minimum global tax (in correlation with Pillar 2 of OECD). This publication will briefly discuss these key amendments.
Investment in the New Capital City
To support the development of the new capital city (IKN), PMK 69 adds a new criterion for tax holiday eligibility. Investors who invest in the new capital city may also be eligible for the tax holiday application as long as they fulfil the other criterion, e.g., a minimum investment of IDR 100 billion (approx. USD 6.3 million) and operate in the field of infant industries.
Extension of Tax Holiday Deadline
PMK 69 extends the deadline for tax holiday applications to 31 December 2025 (adding one more year for the investors to submit their applications).
Minimum Global Tax
To implement Pillar 2 of OECD, PMK 69 regulates new regulations concerning global minimum tax for multinational group companies. PMK 69 states that taxpayers who are subject to minimum global tax because they are part of multinational group companies in Indonesia will be subject to additional tax rates as regulated in the prevailing regulations even though they already obtained the tax holiday award.
Commentary
With the addition of a new criterion for tax holiday eligibility and the extension of the tax holiday, the MoF hopes for more investment in Indonesia, especially investment in the new capital city – to support the government’s plan to develop the new capital city. In addition, the government also shows its support to Pillar 2 OECD by introducing the requirement for a minimum global tax rate in this regulation – emphasizing that the taxpayers who already obtained the tax holiday award will not get away from the new regulation concerning the minimum global tax for multinational group companies.
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1 Peraturan Menteri Keuangan No. 69 Tahun 2024 tentang Perubahan atas Peraturan Menteri Keuangan No. 130/PMK.010/2020 tentang Pemberian Fasilitas Pengurangan Pajak Penghasilan Badan
