Ministry of Finance: Additional Tax Revenue from Global Minimum Tax Implementation Reaches IDR 8.8 trillion

JAKARTA. The Ministry of Finance estimates that there will be additional tax revenue between IDR 3.8 trillion and IDR 8.8 trillion if Indonesia implements the global minimum tax provisions according to the international tax agreement under Pillar 2.

The additional revenue is obtained from the application of Top-up Tax on the difference in taxes imposed by multinational companies in countries or jurisdictions with tax rates below 15 percent, in accordance with the Income Inclusion Rate (IIR) clause.

The Indonesian government has shown its commitment to implementing the provisions of the minimum tax rate or Global Anti Base Erosion (GloBE), by signing the Multilateral Instrument (MLI) Subject to Tax Rule (STTR).

Adjustment of Domestic Regulations

With the signing of the MLI STTR, Indonesia is bound by the agreement to impose additional taxes on transactions such as royalty payments, interest, and certain types of other services, up to the minimum threshold of 9%.

This means that if a country, according to its Tax Treaty, imposes a tax rate below 9% on royalties, interest, or other services, the difference will be subject to tax until it reaches the minimum threshold.

Deputy Finance Minister II, Thomas Djiwandono, as quoted by Kontan.co.id, stated that the implementation of the minimum tax rate is supported by adjustments to regulations in force in Indonesia.

Therefore, according to him, Indonesia will recalibrate its tax system to accommodate global tax provisions while maintaining its attractiveness to investors. (ASP/KEN)