Misbakhun Confirms PFII Will Still Refer to GMT Agreement

The Indonesian International Financial Centre (PFII) will provide attractive tax facilities to investors. However, these facilities will still refer to the Global Minimum Tax (GMT) agreement. This was confirmed by Mukhamad Misbakhun, Chair of Commission XI of the House of Representatives (DPR), to CNBC Indonesia on Thursday (23/7/2016). He stated that the law already provides for investors to be granted a 50-year tax holiday, but the changing international tax landscape must be followed. Misbakhun explained that the mechanism is already in place, and it remains to be seen whether companies investing in the PFII fall within the scope of the global minimum tax. If they do not, they can still enjoy the 50-year tax holiday. The GMT is a global agreement that has been implemented in more than 60 countries. Indonesia is on the list and has enforced GMT since 1 January 2025, alongside Singapore, Malaysia, Hong Kong, and the UAE. At the PFII, the GMT rules will also apply to covered Multinational Enterprises (MNEs), specifically those with a minimum global turnover of 750 million euros. The scheme for MNE groups involves the Qualified Domestic Minimum Top-up Tax (QDMTT) imposed by the subsidiary’s country, the Income Inclusion Rule (IIR) imposed by the parent entity’s country, and the Undertaxed Payment Rule (UTPR) imposed by other group member countries. This implementation will not result in additional tax charges if the business actor is an individual and not part of an MNE with a global turnover below 750 million euros, or if the business actor in the PFII has an effective tax rate above 15% after being combined with other subsidiaries outside the PFII in Indonesia. In addition to the tax holiday, investors, business actors, and experts there are also granted other facilities, such as income tax collection exemptions for foreign taxpayers, as well as various VAT and luxury-goods sales tax facilities. The PFII is the implementation of Article 248A of Law Number 4 of 2026 concerning the Amendment to Law Number 4 of 2023 on Financial Sector Development and Strengthening (P2SK), which mandates the regulation of the Indonesian International Financial Centre through a separate law. The PFII is a strategic step to serve as a catalyst for financial market deepening, diversification of instruments and financing sources, increased investment, and strengthening Indonesia’s position as part of the global financial ecosystem.