The Indonesian government plans to immediately implement the Global Minimum Tax (GMT) system, a concept proposed by the Organisation for Economic Co-operation and Development (OECD), with a minimum effective tax rate of 15%. The Deputy Minister of Finance stated that implementing the global minimum tax in Indonesia could increase state revenue by IDR 3.8 trillion, reaching IDR 8.8 trillion. Considering the rapid development of technology and digitalization, implementing the global minimum tax is very important. This development makes national borders increasingly blurred, so many multinational companies operate in multiple countries without having a physical presence. This condition means that the traditional tax system applied so far cannot tax these companies. In fact, multinational companies, often engaged in the technology sector, derive substantial profits from the countries where they operate. The result is an imbalance between the profits they earn and where they pay taxes, which puts some countries, especially developing ones, at a disadvantage. Many countries cannot obtain tax rights from companies in developed nations, and this imbalance ultimately exacerbates global economic inequality.
Traditional tax frameworks cannot address these challenges, so the government plans to push for the implementation of the global minimum tax as soon as possible. Implementing this tax system can overcome the challenges posed by globalization and digitalization. This new landscape requires a comprehensive overhaul of domestic policies to align with global standards and remain competitive. Citing the World Economic Forum, the GMT aims to end the practice of multinational companies shifting profits to low-tax countries and regions, even though revenue is generated elsewhere. Countries that previously served as tax havens, including Ireland, Luxembourg, Switzerland, and Barbados, are now implementing such minimum tax rates. This includes commitments from over 140 countries to implement a new global tax treaty designed to ensure multinational companies pay a minimum tax rate.
The Indonesian government plans to immediately implement the Global Minimum Tax (GMT) system, a concept proposed by the Organisation for Economic Co-operation and Development (OECD), with a minimum effective tax rate of 15%. The Deputy Minister of Finance stated that implementing the global minimum tax in Indonesia could increase state revenue by IDR 3.8 trillion, reaching IDR 8.8 trillion. Considering the rapid development of technology and digitalization, implementing the global minimum tax is very important. This development makes national borders increasingly blurred, so many multinational companies operate in multiple countries without having a physical presence. This condition means that the traditional tax system applied so far cannot tax these companies. In fact, multinational companies, often engaged in the technology sector, derive substantial profits from the countries where they operate. The result is an imbalance between the profits they earn and where they pay taxes, which puts some countries, especially developing ones, at a disadvantage. Many countries cannot obtain tax rights from companies in developed nations, and this imbalance ultimately exacerbates global economic inequality.
Traditional tax frameworks cannot address these challenges, so the government plans to push for the implementation of the global minimum tax as soon as possible. Implementing this tax system can overcome the challenges posed by globalization and digitalization. This new landscape requires a comprehensive overhaul of domestic policies to align with global standards and remain competitive. Citing the World Economic Forum, the GMT aims to end the practice of multinational companies shifting profits to low-tax countries and regions, even though revenue is generated elsewhere. Countries that previously served as tax havens, including Ireland, Luxembourg, Switzerland, and Barbados, are now implementing such minimum tax rates. This includes commitments from over 140 countries to implement a new global tax treaty designed to ensure multinational companies pay a minimum tax rate.