What is global minimum taxation in Indonesia? Explanation of target companies, DMTT, and tax filing practices

Indonesia's Global Minimum Tax is an international tax system that aims to ensure an effective tax rate of at least 15% in each country/region where multinational corporate groups are located. In Indonesia, it was introduced by Minister of Finance Regulation PMK No.136/2024, and IIR and DMTT are applicable from January 1, 2025, and UTPR from January 1, 2026.

One thing to be especially careful about with this system is the misunderstanding that ``Indonesian subsidiaries are not eligible because they are small in size.'' Eligibility is determined for the entire group, not for individual subsidiaries. Therefore, if the consolidated gross income of the group including the parent company in Japan is 750 million euros or more per year, even if the Indonesian corporation's sales are small, the Indonesian corporation may be required to take measures such as Notification and DMTT declaration, and if additional tax is incurred, it will also be liable to be paid.

This article will outline the overall picture of the system in Indonesia, the differences between IIR, UTPR, and DMTT, and the actual practices and schedules that Japanese companies should implement.

If you want to get to the main points first

• In principle, the target group is multinational corporate groups with consolidated gross revenues of 750 million euros or more. Basically, medium-sized and small-sized groups are not eligible.
• Indonesia's corporate tax rate is 22%, but DMTT (domestic minimum additional tax) can still be incurred.
• Even if the Japanese head office handles GloBE calculations and GIR, the Indonesian subsidiary still needs to handle notifications and DMTT declarations.
• Please note that in the first year, the deadline for paying additional tax comes before the filing deadline.

1. System concept

The global minimum tax is a system based on Pillar Two of the OECD/G20 BEPS project. The aim is simple: to prevent multinational companies from shifting profits to low-tax countries, reducing the tax burden for the group too much.

In short, when the GloBE effective tax rate in a country or region falls below 15%, the shortfall is levied as a top-up tax, raising it to a minimum of 15%.

It should be noted here that this effective tax rate is not the same as the statutory corporate tax rate. It is calculated on a country/region basis after adjusting income and applicable tax amount according to GloBE rules.

2. Introduction status in Indonesia

In Indonesia, PMK No.136/2024 defines the framework of the system. This law stipulates the IIR, UTPR, and DMTT taxation of Indonesian corporations and permanent establishments (PEs) that are constituent companies of the target group.

Furthermore, specific procedures such as taxpayer registration, Notification, GIR (GloBE Information Return), GloBE annual return, and payment of additional tax amount are stipulated by the Director-General of Taxation Regulation PER-6/PJ/2026. GloBE-related declarations have been developed with the premise of electronic filing, and practical measures will be taken in line with this.

Therefore, it is not enough for target companies to simply understand the outline of the system. It is necessary to check individually what kind of registration, notification, declaration, and payment obligations are imposed on Indonesian corporations.

3. Determining the target group

The target group is multinational corporate groups whose ultimate parent company has annual consolidated gross revenue of EUR 750 million or more in its consolidated financial statements. Judgment is not made on a single year basis, but on whether this standard is met in at least two of the four fiscal years immediately preceding the GloBE fiscal year in question.

Judgments are not made by the Indonesian subsidiary alone, but by the entire group, including the parent company. No matter how small the sales or assets of the Indonesian subsidiary are, if the entire group meets the standards, it will be subject to notification and declaration. Conversely, small and medium-sized Japanese corporate groups whose consolidated total income does not meet the standards are generally not eligible for this system.

4. Differences between IIR, UTPR, and DMTT

There are three main mechanisms that need to be understood regarding Indonesia's global minimum tax:

DMTT is particularly important in practice. Once the DMTT is applied, Indonesia will have priority in imposing top-up tax on low-taxed income generated in Indonesia. This is a system in which tax is first imposed in Indonesia before it is taxed in other countries such as Japan. That is why Indonesian companies need to check their own GloBE effective tax rate and the possibility of DMTT, in addition to filing regular corporate tax returns.

5. Why DMTT occurs even if the corporate tax rate is 22%

Indonesia's statutory corporate tax rate is 22%. It is sometimes thought that DMTT has nothing to do with it because it is above 15%, but this is where the most misunderstanding occurs.

GloBE effective tax rate is not determined by the statutory tax rate. It is the result of adjusting accounting profits and applicable tax amounts using GloBE rules and calculating them for each country/region. For example, tax benefits such as tax holidays, tax credits, temporary differences, and GloBE-specific adjustments affect GloBE income and tax liability.

As a result, even if the statutory tax rate is 22%, the GloBE effective tax rate may fall below 15% due to tax incentives, etc., and DMTT may occur. Particularly for companies that take advantage of income-based incentives or tax credits, such as tax holidays, careful checks are necessary.

6. Indonesia’s Global Minimum Taxation Practices

Applicable start period

According to PMK No.136/2024, IIR and DMTT are applicable from January 1, 2025, and UTPR from January 1, 2026. Particular attention should be paid to the handling of fiscal years. The GloBE business year is determined based on the ultimate parent company's consolidated fiscal year, not the Indonesian calendar year. If a company that closes its fiscal year in March is considered on a calendar year basis, there will be a lag, so you need to be careful.

3Monthly settlement/first year schedule

For example, if the ultimate parent company has a fiscal year end in March and the first GloBE business year is from April 1, 2025 to March 31, 2026, the main deadlines are as follows.

One thing to be especially careful about with this schedule is that the payment deadline comes before the filing deadline. In the above example, the additional tax payment is due on March 31, 2027, and the regular filing deadline for the GloBE annual return is July 31, 2027. In other words, thinking ``I just need to finish the calculations by the time I file my tax return'' is not enough.

If there is a possibility that additional tax will be incurred, it is necessary to calculate the tax amount backwards from the payment deadline and proceed with internal approval. This is an important point in dealing with the first year.

Work carried out by the Indonesian corporation

In the target group, the following work will generally occur on the Indonesian corporation side.

• Confirm whether the group is eligible for the system and confirm the consolidated total income of the ultimate parent company
• Identification of constituent companies located in Indonesia
• Apply for additional Wajib Pajak GloBE status
• Confirmation of GIR submission entity and determination of necessity of notification submission
• Consideration of whether DMTT occurs, preparation of DMTT return, and tax calculation and payment if additional tax is incurred.
• Information sharing with Japanese parent company and group tax department, and coordination of calculation policies and disclosure methods with accounting auditors

In practice, it is difficult for the Indonesian corporation alone to complete the GloBE calculations for the entire group. GloBE calculations are performed based on the accounting and tax information of the entire group, so it is necessary to ensure consistency with the calculation policy adopted by the parent company in Japan, the GIR of the entire group, and data from each country and region.

7. Organizing GIR and Notifications

GIR (GloBE Information Return) is a tax return that summarizes GloBE information for the entire group. Information on constituent companies, organizational structure, GloBE effective tax rate for each country/region, top-up tax calculation results, tax amount distribution based on IIR/UTPR, etc. are included.

Notification has a different role, and is a notification that informs the tax authorities "which corporation will submit the GIR". When a Japanese parent company or a foreign designated filing corporation issues a GIR, the Indonesian corporation will, in principle, submit a notification. On the other hand, if the Indonesian entity itself has submitted a GIR based on PER-6/PJ/2026, it will be exempted from Notification.

In short, once it is determined who will issue the GIR, it will be easier to sort out whether Notification is necessary or not. It is important to solidify the design of the submitter as early as possible.

8. Checklist for Japanese companies

These are the minimum items that Japanese companies with subsidiaries in Indonesia should check.

Especially for Japanese companies, it is important to decide early on the division of roles among the Japanese parent company, accounting auditor, Indonesian corporation, and Indonesian tax advisor.

For example, a Japanese parent company or auditor could be responsible for group-wide GloBE calculations and GIR preparation, and an Indonesian subsidiary and local tax advisor could be responsible for notification, DMTT declaration, and payment procedures in Indonesia.

summary

In Indonesia, global minimum taxation will begin in 2025 with PMK No. 136/2024, and new practices such as DMTT, GIR, and Notification are required for target groups. The key point is that the entire group needs to act, not just the Indonesian corporation alone. The burden of responding in the first year will vary greatly depending on whether the Japanese head office, auditor, Indonesian corporation, and local tax advisor divide their roles early and organize the calculation policy and submission entity.

Also, it is important to note that if there is an additional tax amount, the payment will precede the filing of the tax return. Make sure you have enough time to prepare so you don't panic just before the deadline.

At Keystone, we provide comprehensive support for Japanese companies in Indonesia, from target determination, DMTT impact analysis, notification response, GIR response support, DMTT return preparation and additional tax payment procedures. If you are considering responding to Indonesia's global minimum tax,Please feel free to contact us.

• PMK No.136/2024（JDIH Ministry of Finance）
• PER-6/PJ/2026（Directorate General of Taxes）
• OECD Administrative Guidance
• OECD Pillar Two（Global Anti-Base Erosion Rules）