Indonesia Awaits OECD Draft on Substance‑Based Tax Incentives

The Directorate General of Economic and Fiscal Strategy (DJSEF) announced that the OECD is discussing a special treatment for substance‑based tax incentives within the global minimum tax framework. The comment was made at an International Fiscal Association (IFA) Indonesia Branch seminar in Jakarta on 3 December 2025.

Substance‑based incentives are granted to companies that demonstrate real economic activity, measured by factors such as employee count, payroll costs, or fixed‑asset investment. The G‑7, at the request of the United States, has proposed that non‑refundable substance‑based tax credits be treated like qualified refundable tax credits (QRTC), which can be paid back in cash over four years. The OECD is reviewing this proposal for possible inclusion in the Global Anti‑Base Erosion (GloBE) rules.

Because the OECD guidance is not yet final, Indonesia is postponing the release of new tax incentives until the draft is completed. The eventual outcome will shape the design of Indonesia’s future incentives and its compliance with international tax standards.