Indonesia to Implement 15% Minimum Tax on Global Corporations Like Google and Facebook Next Year

Directorate General of Taxes Building, Ministry of Finance (Photo: Ricardo - JPNN)

In a significant move, Indonesia is poised to embark on the implementation of a global corporate minimum tax of 15% in the upcoming year. This strategic tax measure is designed to be applied to the global corporations, with a substantial gross turnover exceeding 750 million euros, including but not limited to digital giants like Facebook and Google. The announcement of this progressive taxation strategy comes in alignment with the intentions of several other nations, setting the stage for a unified international effort.

Yon Arsal, the Tax Compliance Expert Advisor to the Minister of Finance, provided insight into this groundbreaking development during an insightful interview with CNBC Indonesia on Wednesday (10/9/2023).

He emphasized that Indonesia is gearing up to synchronize its efforts with other nations that share the same intent to implement this taxation policy by 2024. The proactive stance taken by Indonesia reflects its commitment to being in line with global standards and contributing to the collaborative efforts on a broader scale.

With the intention of ensuring a smooth and effective application, Yon Arsal highlighted that Indonesia has meticulously embedded the provisions pertaining to this tax initiative within the framework of the Harmonization of Tax Regulations Act (HPP).

Notably, the Directorate General of Taxes has taken strategic measures to furnish all necessary supporting elements, including technological infrastructures and a skilled workforce, to facilitate a seamless execution of this policy.

One crucial aspect of this development revolves around the political context in which it is being introduced. Yon Arsal addressed concerns related to the potential implications of introducing such a significant tax measure in a politically charged year marked by leadership transitions.

He clarified that Indonesia’s commitment to implementing this taxation policy for global corporations is shared by many nations around the world. This international consensus underscores the collective dedication to fostering a fairer global taxation landscape.

While the implementation of such a tax policy could raise questions about its potential impact on investments, Yon Arsal provided a broader perspective. He elucidated that Indonesia’s decision is part of a global initiative, meaning that the country is standing shoulder to shoulder with other nations facing similar challenges and opportunities.

In this context, Yon Arsal expressed confidence that the introduction of this tax will not deter investments, as it is just one piece of the larger investment puzzle.

Moreover, Yon Arsal highlighted that Indonesia has been proactively reforming its regulatory framework to enhance its attractiveness as an investment destination. He pointed out significant efforts, such as the implementation of the Job Creation Law, which has bolstered legal certainty for investors and addressed various concerns within the business ecosystem.

By pursuing a multi-pronged approach that encompasses legal reforms, infrastructural development, and strategic tax policies, Indonesia aims to fortify its position as a favorable investment hub while adhering to international tax norms and responsibilities.