Jayanty Nada Shofa, Jakarta – Indonesia is working on non-fiscal incentives to offset the impact of the global minimum tax or GMT so the country remains attractive to foreign investors.
Southeast Asia's biggest economy has implemented an internationally agreed-upon minimum corporate tax of 15 percent for large corporations as stated by an accord backed by at least 130 countries. The policy aims to prevent big companies from shifting profits and tax revenues to low-tax economies, while also ending the race to the bottom in corporate taxation. The tax applies to multinationals with consolidated global revenues of at least 750 million euros ($885 million).
Febrio Kacaribu, a senior official at the Finance Ministry, told a press conference that Jakarta was aware that the GMT had encouraged countries to search for other incentives. Indonesia's corporate income tax stands at 22 percent. Now that a 15 percent GMT had been in place since the beginning of the year, Indonesia can only give an exemption rate of up to 7 percent, according to Febrio.
"The GMT leads to adjustments in tax holiday and tax-related incentives in Indonesia and elsewhere.... But then again, it has turned into a competition as to who [or which country] can bring in investments," he said in Jakarta on Monday.
"We have seen other governments coming up with non-fiscal, non-tax incentives. We are currently reviewing the options that suit Indonesia the best."
The economist underlined that the taxation aspect was not the only thing that could make or break an investment deal. "It's also about the investment climate and ease of doing business," Febrio said, while pointing to Indonesia's upcoming "fictive positive" automatic permit issuance system.
Indonesia will set service-level agreements (SLAs) in permit issuance, starting October 5. The system will automatically grant businesspeople the necessary documents if the process has passed the SLAs set at the respective government bodies. Jakarta has also launched sweeping reforms related to the local content requirement, which many international investors have found to be cumbersome.
Investors now can gain up to 20 percent of the local content score in exchange for research and development. Tax news outlet DDTC recently reported that the government had prepared 3 types of new incentives in response to the GMT, namely cash subsidy for investments in strategic sectors, refundable tax credit, and nonrefundable tax credit.
Indonesia collected Rp 194.2 trillion ($11.7 billion) in corporate income tax so far this year as of end-August. The corporate income tax also fell 8.7 percent, down 8.7 percent year-on-year (yoy), as seen in the data published by the Finance Ministry. Official statistics showed that Indonesia attracted Rp 510.3 trillion (nearly $30.8 billion) of foreign investments throughout the first half of 2025.