Indonesia is preparing non-fiscal incentives to mitigate the impact of the 15% global minimum tax (GMT) on large corporations and maintain its competitiveness in attracting foreign investment. The GMT, adopted by more than 130 countries, seeks to prevent profit shifting to low-tax jurisdictions and applies to multinationals with global revenues above EUR 750 million (USD 885 million). Indonesia’s current corporate tax rate is 22%, but with the GMT in place, the government can only offer tax exemptions of up to 7%. According to Finance Ministry official Febrio Kacaribu, the measure has sparked competition among countries to introduce non-tax incentives, and Indonesia is now exploring options that best fit its economy. He emphasised that tax is only one aspect of investment decisions, noting that the overall business climate and regulatory efficiency are equally critical.
To improve the investment environment, Jakarta will introduce a “fictive positive” permit system on October 5, under which business permits will be automatically issued if government agencies miss the service-level agreement (SLA) deadlines. Reforms have also been made to simplify local content requirements, allowing investors to gain up to 20% of the local content score through research and development. Additionally, the government is preparing three types of incentives in response to the GMT: cash subsidies for strategic sectors, refundable tax credits, and nonrefundable tax credits. As of the end of August 2025, Indonesia had collected IDR 194.2 trillion (USD 11.7 billion) in corporate income tax, down 8.7% year-on-year. Meanwhile, foreign direct investment reached IDR 510.3 trillion (USD 30.8 billion) in the first half of the year, highlighting both the challenges and opportunities the country faces in sustaining investment growth under the new global tax regime.
