PMK-1/2026

PMK-1/2026, which constitutes the fourth amendment to Minister of Finance Regulation No. 81 of 2024 on Tax Provisions for the Implementation of the Core Tax Administration System (“CTAS”), introduces several material changes to the book value regime in the context of business restructuring. One of the key changes is the expansion of the definition of State-Owned Enterprises (“Badan Usaha Milik Negara/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 organizing 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, with approvals 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.

Further, 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.