On September 2026, METALAW have contributed to the 2027 Edition of Lexology’s Panoramic: Tax on Inbound Investment specifically in the Indonesia Chapter, published by Lexology which has been analysing law firms across the world.
Under this publication, METALAW provides an overview of Tax on Inbound Investment in Indonesia, which was covered through several questions in a Q&A format provided by Graham Samuel-Gibbon and Claire Hawley of Taylor Wessing.
This publication answers topics describing the current condition of tax on inbound investment in Indonesia, which includes questions regarding specific tax on inbound investment provisions, compliances, and trends. The issues discussed in this publication mainly focuses on:
- The Indonesian tax treatment of inbound acquisitions, covering distinctions between share acquisitions and asset acquisitions, including the applicable income tax, value added tax (“VAT”), land and building acquisition duty (bea perolehan hak atas tanah dan bangunan – BPHTB), and final income tax regimes for listed and non-listed companies.
- The availability and limitations of step-up in basis and asset revaluation mechanisms, including the treatment of tangible and intangible assets, acquired business assets as the basis for depreciation and amortisation, the use of book value versus market value in mergers and restructurings.
- Considerations on the domicile of acquisition vehicles, analysing the tax implications of using Indonesian or offshore acquisition companies, access to domestic tax incentives, the use of treaty benefits for international tax structuring options, and the utilization of special purpose acquisition companies (SPAC).
- General understanding of tax treatments in mergers and share exchanges, including on whether there is a tax benefit in issuing stock as consideration instead of cash.
- Transaction-level taxes and costs, such as stamp duty, VAT, land and building acquisition duty, and final income tax on share transfers, including allocation of tax liabilities between buyers and sellers.
- The treatment of net operating losses, deferred tax assets, and insolvency-related tax issues, including limitations following a change of control, interaction with GloBE minimum tax rules, and the priority of tax claims in bankruptcy proceedings.
- Interest deductibility and financing structures for acquisitions, addressing thin capitalisation rules, related-party financing, arm’s-length requirements, recharacterization of excessive interest as deemed dividends, and restrictions on interest related to non-taxable income.
- Tax protections in acquisition documentation, including warranties, indemnities, escrow arrangements and tax covenants, and the emerging use of warranty and indemnity insurance, as well as the tax treatment of compensation payments under such protections.
- Post-acquisition tax planning strategies, such as group restructurings, tax-neutral spin-offs, migration of tax residence, withholding tax implications on interest and dividends, and tax-efficient profit extraction methods through dividends, royalties, management fees, intragroup services, and shareholder loans.
- Disposal strategies and recent tax developments affecting inbound investment, covering the disposal of business assets and shares in Indonesian or foreign holding companies, capital gains taxation on direct and indirect share transfers, mitigation through tax treaties, sector-specific rules (including oil and gas), analysis on mitigating and deffering tax, and recent policy trends such as tax incentives, digital tax administration reform, sustainability measures, and enhanced information exchange.
- Recent tax development and regulatory trends in Indonesia, covering the updates over the development of Indonesia’s tax and fiscal policies affecting inbound investment, including investment incentives for strategic sectors, developments in carbon taxation, and regulatory updates concerning the involvement of certain divisions of the national army and the national police in gathering information on the taxpayer compliance, and the confiscation of publicly traded shares for tax collection purposes.
The publication of this Lexology Panoramic by METALAW provides answers to the current frequently asked questions in relation to the Tax on Inbound Investment in Indonesia. METALAW has also contributed to several other articles which discussed Indonesia’s current trend and development of law in Conventus Law.
For further information, please contact:
MetaLAW, Legal & Tax Consultant, Jakarta, Indonesia
general@metalaw.id
