TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Govt eyes up to Rp 8.8t in extra revenue from global tax deal
Implementing the global minimum tax (GMT) in Indonesia was neither optional nor easy, the deputy finance minister said at this year's International Tax Forum, and would require internal and external support to ensure the country benefited from the global policy while remaining an attractive investment destination.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Deputy Finance Minister Thomas Djiwandono speaks to the press on Sept. 11, 2024 at the ministry in Central Jakarta. (JP/Deni Ghifari)
I
mplementing the 15 percent global minimum tax (GMT) for multinational companies could boost state revenue by an estimated Rp 3.8 trillion to Rp 8.8 trillion (US$252 million to $583 million), according to Deputy Finance Minister Thomas “Tommy” Djiwandono.
The GMT is an international agreement that proposes imposing a minimum 15 percent profit tax on multinational corporations earning more than 750 million euros ($839 billion) per year in the jurisdiction where they provide goods or services.
The initiative aims to curb tax avoidance tactics such as profit shifting, where companies exploit tax loopholes by moving profits to countries with lower rates, often leading to a "race to the bottom”.
It also seeks to ensure fairer distribution of tax revenues, based on a company’s economic activities in a particular jurisdiction.
Expected to come into effect this year, the scheme was spearheaded by the Organisation for Economic Co-operation and Development (OECD) in 2019 and agreed by more than 130 countries in 2021.
Indonesia is among the countries that have committed to implementing the GMT, and the Finance Ministry’s Fiscal Policy Agency has stated that a regulation on the matter is being drafted.
However, formulating and implementing the GMT in emerging economies like Indonesia is challenging, as it might hinder inflows of both foreign portfolio investment and foreign direct investment (FDI), according to Tommy.
