Jakarta. The Indonesian government has officially adopted a global minimum tax rate of 15 percent to foster a healthier and more competitive investment climate, a senior official announced on Thursday.

The global minimum tax aims to ensure that large multinational corporations pay a minimum level of tax in every country where they operate, according to the Organization for Economic Cooperation and Development (OECD). This measure seeks to reduce profit-shifting practices and end the "race to the bottom" on corporate tax rates.

Indonesia's implementation of this tax is outlined in a regulation signed by the finance minister on December 31, 2024.

“This regulation will prevent tax evasion practices through operations in tax havens. We welcome this scheme as a significant step toward creating a fairer global taxation system,” said Febrio Nathan Kacaribu, Head of the Finance Ministry’s Fiscal Policy Board.

The initiative was spearheaded by the Group of 20 (G20), of which Indonesia is a member, and introduced globally by the OECD with support from over 140 countries. To date, at least 40 nations have implemented the global minimum tax.

The tax applies to multinational corporations with consolidated global revenues of at least 750 million euros.

“This scheme does not apply to individual taxpayers or micro, small, and medium enterprises (MSMEs),” Febrio added.

Multinational corporations must pay the global minimum tax within 15 months after the end of the fiscal year in which the tax report is submitted. However, taxpayers will have an extended deadline of 18 months for the inaugural year.

“The adoption of the global minimum tax by countries worldwide marks a significant milestone in reforming the global taxation system to become more inclusive and supportive of sustainable economic growth,” Febrio said.