BKPM Adjusts Tax Holiday Rules to Align with the Global Minimum Tax

The Government is currently finalizing a Draft Regulation of the Minister of Investment and Downstream Industry/Head of the Investment Coordinating Board (“BKPM”) on Amendment to Regulation of BKPM No. 7 of 2020 on the Details of Business Activities and Types of Production of Pioneer Industries and the Procedures for Granting Corporate Income Tax Deduction Facilities (“PerBKPM 7/2020”). This provision is part of the Government’s efforts to revise Regulation of the Minister of Finance No. 130/PMK.010/2020 (“PMK 130/2020”) on the Granting of Corporate Income Tax (“Corporate PPh”) Deduction Facilities, with the aim of aligning the tax holiday facility with the Global Minimum Tax (“GMT”) rules.

“[The draft regulation] is currently being harmonized with the Directorate General of Laws and Regulations (DJPP), as the extension of the relevant Regulation of the Minister of Finance also expired in December last year,” said Andre Abraham, Head of the Legal Bureau of BKPM, to Hukumonline.

Since early 2025, the Government has imposed a 15% GMT rate on multinational enterprises, which has implications for the provision of incentives in the form of tax holidays or tax allowances. In addition, the Government is formulating adjustments to the incentive schemes to ensure that they remain competitive while being aligned with international rules, including exploring instruments such as a Qualified Refundable Tax Credit (“QRTC”) that is compatible with the Global Anti-Base Erosion (“GloBE”) Rules.