Side-by-side System Does Not Block Indonesia’s QDMTT on Groups

JAKARTA, Dec 4 2025 – Indonesia has confirmed that the side‑by‑side system does not prevent the implementation of the Qualified Domestic Minimum Top‑up Tax (QDMTT) on constituent entities whose ultimate parent entity (UPE) is located in the United States. The clarification was given by international tax analyst Melani Dwi Astuti during a seminar of the International Fiscal Association (IFA) Indonesia Branch.

The side‑by‑side system, agreed by the G‑7 to accommodate the United States’ refusal to adopt the OECD GloBE rules, excludes the Income Inclusion Rule (IIR) and Undertaxed Payment Rule (UTPR) for groups with a US UPE. Nevertheless, QDMTT can still be applied; in a sample structure with a US UPE, an intermediate parent entity (IPE) in Australia, and subsidiaries in Indonesia (effective tax rate 10 %), Singapore (13 %) and China (12 %), the 15 % global minimum yields a top‑up of 5 % for Indonesia and 2 % for Singapore.

Because the US and China have not adopted the GloBE rules, they do not levy QDMTT, while Indonesia and Singapore, which have adopted the rules, can impose the additional tax based on the rate differentials. This arrangement provides Indonesian tax authorities a legal basis to address low‑taxed profits without affecting US‑headquartered multinational groups, reflecting the international compromise on global minimum taxation.