Approaching End of September: Recap of Key Global Minimum Tax Rules
THE global anti-base erosion rules (global minimum tax/GMT) have become part of Indonesia's tax landscape. These provisions form part of the Pillar Two agreement developed by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS). See Understanding Global Minimum Tax: From Agreement to Implementation
In Indonesia, the application of GMT is governed by Government Regulation (Gov. Reg.) 55/2022 and Minister of Finance Regulation (MoF Reg.) 136/2024. The Directorate General of Taxes (DGT) has also issued PER-6/PJ/2026 to further regulate the procedures for fulfilling related obligations.
As such, what exactly is GMT? Does it affect all companies? What obligations must companies covered by GMT observe?
- What Is the Global Minimum Tax (GMT)?
In brief, GMT is a mechanism that ensures multinational enterprise (MNE) groups with consolidated gross revenue of at least EUR750 million pay tax at a minimum rate of 15% in every jurisdiction in which the group operates.
If the effective tax rate (ETR) borne by an MNE group in a given jurisdiction falls below 15%, a top-up tax will be levied. A key point to note is that the minimum rate of 15% is not compared against the corporate income tax rate applicable under domestic legislation.
The benchmark is the ETR, the formula and calculation basis of which follow the GMT provisions. Pursuant to MoF Reg. 136/2024, the ETR is calculated by dividing the adjusted covered taxes by the net GloBE income. See Global Minimum Tax Gives Rise to Top-Up Tax: Calculation Method
- Is My Company Affected?
The next question is whether every company must comply with GMT obligations. The answer is: not all companies. MoF Reg. 136/2024 confirms that a constituent entity or member of a joint venture group of an MNE group becomes a taxpayer covered by GMT (Global Anti-Base Erosion Rules/GloBE) if:
- the annual gross revenue of the MNE group is at least EUR750 million based on the consolidated financial statements of the ultimate parent entity (UPE); and
- the gross revenue threshold referred to is met in at least 2 of the 4 tax years preceding the year in which GloBE applies.
Accordingly, there are two initial questions a company must answer. First, is the company a member of an MNE group? An MNE group is a group that has at least one entity or permanent establishment (PE) located in a country or jurisdiction different from that of the ultimate parent entity (UPE).
Second, does the MNE group satisfy the EUR750 million threshold? If the group's consolidated revenue reaches at least EUR750 million in a minimum of 2 of the 4 tax years prior to the year of GloBE imposition, the group falls within scope. See Who Does the Global Minimum Tax Target?
Subsequently, a constituent entity that is established or domiciled in Indonesia and is a member or part of such an MNE group is designated as a GloBE taxpayer. As a GloBE taxpayer, the entity must attend to the fulfilment of its GloBE obligations.
MoF Reg. 136/2024 also sets out a number of entities excluded from GMT, including government bodies, international organisations, non-profit organisations, pension fund entities, certain investment fund entities and certain real estate investment trust (REIT) entities. See Which Entities Are Excluded from Global Minimum Tax?
- Obligation to Add GloBE Taxpayer Status
A group's inclusion within the scope of GloBE also carries administrative consequences, including the obligation to add GloBE taxpayer status. This obligation is set out in Article 4 paragraph (1) of PER-6/PJ/2026. See DGT Records 1,460 Entities Have Registered as GloBE Taxpayers
PER-6/PJ/2026 states that a constituent entity or member of a joint venture group becomes a GloBE taxpayer if the group fulfils two conditions: annual revenue of at least EUR750 million and that threshold being fulfilled in at least 2 of the 4 tax years preceding the GloBE imposition year.
Once these criteria are met, the GloBE taxpayer must apply to add its status. The application is submitted electronically via the coretax system. This obligation must be fulfilled no later than 9 months after the end of the first GloBE year in which the MNE group meets the threshold.
Notably, if a GloBE taxpayer does apply, the DGT may add the status ex officio based on the results of administrative examination into data and information held or obtained by the DGT. See MNEs in Indonesia Must Apply for GloBE Taxpayer Status by September
Accordingly, if a group first falls within the scope of GloBE in 2025, the addition of status must be completed this month, namely September 2026. The DGT has also provided a feature within coretax to add GloBE taxpayer status. See How to Add GloBE Taxpayer Status via DGT Coretax
- Obligations in Implementing GloBE
Once within the scope of GloBE taxpayer obligations, companies must take into account at least 7 obligations relating to the implementation of GloBE.
First, calculating GloBE income or loss. Several aspects are involved in this step, including implementing applicable accounting standards, understanding what constitutes GloBE income or loss and applying the necessary adjustments.
Various adjustments, comprising general, elective and specific adjustments, are fundamentally aimed at establishing what is referred to as a common tax base. This uniformity ensures accuracy in calculating the ETR and excess profit.
Second, determining the adjusted covered taxes. Examples of steps at this stage include identifying covered taxes and amounts outside the scope of GloBE, making the necessary adjustments and considering the tax treatment between entities.
Furthermore, the third step encompasses the mechanism for handling temporary differences in calculating adjusted covered taxes. Specific provisions must also be considered for flow-through entities, PEs, controlled foreign companies (CFCs), and so forth.
Third, calculating the ETR. Steps at this stage include computing the ETR using the formula of covered taxes divided by GloBE income, monitoring the jurisdictions and types of entities involved and applying the substance-based income exclusion (SBIE).
Fourth, applying safe harbours or reducing top-up tax. Steps at this stage include utilising the permanent safe harbour provisions, the CbCR safe harbour, the UTPR safe harbour and the simplified calculations safe harbour for nonmaterial constituent entities.
Fifth, examining and calculating the top-up tax levied and allocated per jurisdiction. Examples of steps at this stage include determining the amount of top-up tax payable and allocating it accurately across jurisdictions, followed by applying the top-up tax mechanism.
Top-up tax mechanisms include the domestic minimum top-up tax (DMTT), the income inclusion rule (IIR) and the undertaxed payment rules (UTPR). Different allocation formulae apply to each top-up tax mechanism.
Sixth, reviewing specific provisions. Examples of steps at this stage relate to business restructuring and entities with special characteristics. Specific analyses are distinguished depending on whether the situation involves a joint venture, a PE or the banking sector.
Seventh, managing administrative aspects. This step covers several aspects, including submitting notifications, filing the GloBE information return (GIR), filing the tax return (surat pemberitahuan/SPT in Indonesian) in connection with GloBE implementation and carrying out tax collection. See news on global minimum tax (dik)