PMK-1/2026 entered into effect in Indonesia on January 22 2026, as the fourth amendment to Minister of Finance Regulation No. 81 of 2024 on Tax Provisions for the Implementation of the Core Tax Administration System. The regulation introduces several material changes to the book value regime in the context of business restructuring.
One of the key updates is the expansion of the definition of state-owned enterprises (Badan Usaha Milik Negara, or BUMN), which now explicitly includes entities in which the Republic of Indonesia holds special rights, in addition to entities that are directly or majority-owned by the state. In parallel, the scope of the minister of finance’s authority has been broadened from organising government affairs in the field of state finance to the wider financial sector, thereby strengthening the legal basis for fiscal and tax policy oversight.
The regulation also introduces procedural and substantive adjustments aimed at simplifying implementation. Approval authority for the application of book value in BUMN restructuring transactions has been streamlined. Approvals are now issued by the relevant government institution rather than the minister supervising BUMN, without affecting the applicable tax treatment. In addition, the business purpose test has been relaxed by reducing the minimum business continuation period from five years to four years, providing greater flexibility for qualifying restructuring transactions.
Furthermore, PMK-1/2026 introduces grandfathering relief for taxpayers that have previously obtained approval to apply book value treatment. Such taxpayers are exempt from recomputing asset transfer values based on fair market value when undertaking subsequent qualifying restructuring transactions, provided the relevant conditions are met. The regulation also incorporates a built-in review mechanism, granting the Ministry of Finance the authority to evaluate the book value regime within three years of its enactment, reflecting the government’s intention to balance restructuring facilitation with fiscal control.
New regulations on double taxation avoidance agreements
Ministry of Finance Regulation No. 112 of 2025 (PMK-112/2025) entered into force in Indonesia on December 30 2025. The regulation establishes a comprehensive administrative framework governing the application of double taxation avoidance agreements (DTAAs) for domestic taxpayers seeking treaty benefits abroad and non-resident taxpayers (Wajib Pajak Luar Negeri) claiming treaty benefits on Indonesian-sourced income.
The regulation aligns DTAA application with Indonesia’s Core Tax Administration System to enhance legal certainty, consistency, and transparency in treaty implementation, while strengthening safeguards against treaty abuse.
For non-resident taxpayers, PMK-112/2025 introduces a revised Directorate General of Tax (DGT) form that places greater emphasis on substantive eligibility rather than formal documentation. While the form requires clearer declarations regarding treaty residence, beneficial ownership, and the absence of treaty abuse, certain administrative requirements are simplified and streamlined compared with previous regulations. The regulation also explicitly incorporates the definition and interpretation of permanent establishment (PE), clarifying when activities conducted in Indonesia may constitute a PE and thereby affect entitlement to treaty benefits.
Treaty benefits are available only to taxpayers with genuine economic substance, including an appropriate legal structure, active business operations, adequate assets and personnel, and independent management authority. Transactions must not be structured primarily to obtain treaty benefits, and the taxpayer must be the true beneficial owner rather than an agent, nominee, or conduit. The DGT form must be properly completed and supported by a Certificate of Domicile (CoD) or competent authority endorsement and is generally valid for up to 12 months. Indonesian withholding agents are required to verify and upload the documentation through the tax portal, with treaty rates applicable only where all the substantive conditions are met.
For domestic taxpayers, PMK-112/2025 requires Indonesian tax residents to apply electronically for a CoD when claiming treaty benefits in treaty partner jurisdictions. Each CoD is limited to one treaty partner, one tax year (or part thereof), and one counterparty. The appendices to PMK-112/2025 also provide illustrative examples of treaty-related transactions, including income characterisation and PE scenarios, to support consistent interpretation and application of the regulation in practice.
New regulations on tax collection and securities seizure
PER-26/PJ/2025 establishes a comprehensive framework governing the seizure, blocking, and sale of publicly traded shares in connection with tax collection. The regulation is designed to ensure legal certainty, procedural uniformity, and effective coordination among tax and financial authorities when enforcing tax debts through capital market instruments. It confirms that securities traded on the stock exchange may be treated as enforceable assets in the same manner as other forms of taxpayer property.
Under the regulation, taxpayer assets subject to enforcement include shares held in sub-securities accounts (Sub Rekening Efek) and funds stored in investor fund accounts (Rekening Dana Nasabah, or RDN). Prior to seizure, tax officials must first request account and balance information from the Indonesian Central Securities Depository (KSEI). Based on this information, a formal request is submitted to the Financial Services Authority (OJK) to instruct the KSEI to block the relevant shares and to require the relevant banks to block the associated RDN. If the outstanding tax debt remains unpaid after the blocking stage, a tax bailiff (Jurusita Pajak) will carry out a formal seizure, which is documented through seizure minutes signed by the relevant parties.
Where the tax debt is not settled within 14 days following the seizure, the DGT is authorised to conduct a forced sale of the seized shares through licensed stock exchange brokers. The selling price is determined by the tax authority and must be at least equal to the market opening price on the day of sale. The proceeds are applied first to settle tax collection costs and outstanding tax liabilities, with any excess proceeds or remaining shares required to be returned to the taxpayer.
Overall, PER-26/PJ/2025 provides a robust enforcement mechanism that integrates actions between the DGT, OJK, and KSEI, reinforcing that publicly traded securities are fully subject to tax enforcement risks in cases of prolonged non-compliance.
