Here are Indonesia’s statutory updates for 2025
Effective January 2025
Indonesia Increases Pension Eligibility Age
Indonesia has raised the minimum retirement age for BPJS Pension Guarantee Program to 59 years, as part of a gradual increase to 65 years. Workers can still claim pension benefits upon retirement or after leaving employment but must start receiving them within three years of reaching the retirement age. The reform ensures annual pension increases without raising contribution rates, promoting long-term financial security.
Source: Ramco
Indonesia Implements 15% Global Minimum Corporate Tax Rate
Indonesia’s finance ministry has issued a regulation to enforce a 15% global minimum corporate tax rate, effective from 1 January 2025. This aligns with the Organisation for Economic Co-operation and Development (OECD) framework to curb tax competition among countries.
Key Details:
- Scope: Applies to multinational companies with an annual global turnover exceeding €750 million.
- Objective: Aims to prevent tax avoidance through tax havens and promote a fairer global tax system.
- Investment Incentives: To mitigate potential impacts on investment, the government plans to introduce tax incentives for growth-driving sectors, though specific details have not been provided.
Source: Reuters
Indonesia Introduces Core Tax Administration System
Indonesia will implement a new Core Tax Administration System under Minister of Finance Regulation No. 81 (PMK-81), streamlining tax regulations and processes for all types of taxes, including Income Tax, VAT, Luxury Goods Tax, and Carbon Tax.
Key Changes:
- Digital Focus: Electronic channels are now the primary method for filing and fulfilling tax obligations. Paper-based channels will only be used if digital systems are unavailable.
- Taxpayer Account: Taxpayers must activate an electronic account for correspondence and document submission with the Directorate General of Taxes (DGT).
- Electronic Communication: Tax documents, including decisions and assessments, will be issued digitally.
- Tax Deposits and Overpayments: Unallocated tax deposits can be offset against tax liabilities or refunded through updated mechanisms.
- Streamlined Refunds: Expanded provisions for tax overpayment refunds and interest compensation.
This initiative aims to enhance efficiency and transparency in tax administration.
Source: PwC
Indonesia VAT Rate Adjustment
Indonesia will update its VAT framework effective 1 January 2025, introducing a 12% standard VAT rate.
Key Details:
- Effective Rate for Non-Luxury Goods: While the VAT rate increases to 12%, non-luxury goods and services will maintain an effective VAT rate of 11%, calculated using a revised tax base formula:
Tax Base = Price of Goods/Services×11/21
This adjustment ensures tax invoices reflect the effective rate of 11%. - Luxury Goods and General Items: The full 12% VAT rate applies to luxury goods and services without adjustments.
- Exemptions: Essentials such as staple foods, public transport, and healthcare services remain exempt.
- Zero-rated VAT: Exports of goods and specified services continue to benefit from zero-rated VAT to support international trade competitiveness.
- Imports and Compliance: VAT applies at customs clearance (calculated on the CIF value), and businesses must file VAT returns through the Directorate General of Taxes’ e-Faktur system with accurate documentation for taxable and exempt items.
Source: Lexology
Indonesia Minimum Wage Increase for 2025
President Prabowo Subianto has announced a 6.5% average increase in Indonesia’s minimum wage, effective 1 January 2025. The updated wages are outlined in Minister of Manpower Regulation No. 16 of 2024 and apply to provincial (UMP), city/district (UMK), and sectoral minimum wages (UMSP/UMSK).
Key Examples:
- DKI Jakarta: Rp5,067,381 → Rp5,396,760
- West Java: Rp2,057,495 → Rp2,191,232
- East Java: Rp2,165,244 → Rp2,305,984
The policy aims to enhance purchasing power, safeguard workers, and support economic stability.
Source: Schinder Law Firm
