Indonesia Regulatory, Tax and Investment Update – Q1 2026

Key corporate, licensing and tax developments businesses should act on

Indonesia has introduced several significant regulatory updates affecting corporate governance, foreign investment structures and tax compliance.

These reforms reflect the government’s broader push toward digital governance, risk-based licensing and strengthened regulatory oversight — while also lowering entry barriers for foreign investors in certain areas.

Below is a consolidated overview of the latest developments and what they mean for your business.

1. New AGMS Requirements under Permenkum No. 49 of 2025;

Effective: 17 December 2025

The Ministry of Law has issued Permenkum No. 49 of 2025, revoking Permenkum No. 21 of 2021 and introducing enhanced corporate governance and reporting requirements.

One of the most significant changes concerns the Annual General Meeting of Shareholders (AGMS).

Historically, many companies treated the AGMS as a procedural formality for internal matters. Under the new regulation, AGMS processes are now subject to stricter formalisation, documentation and submission requirements via the Legal Entity Administration System (AHU Online).

Key Changes

The regulation significantly increases compliance expectations — particularly for:

• Foreign-owned entities (PT PMA)
• Companies with cross-border reporting structures
• Groups requiring shareholder approvals at multiple levels

Failure to comply may result in administrative sanctions under Article 17 paragraph (2), including:

• Written warnings
• Blocking of access to AHU Online

Restricted AHU access may prevent companies from processing other essential corporate actions, including but not limited to:

• Changes of directors
• Changes of shareholders
• Capital structure amendments

Recommended action

Companies should adopt a structured and proactive AGMS preparation timeline, particularly for the upcoming AGMS due by 30 June 2026.

Early preparation allows sufficient time to:

• Finalise statutory financial statements
• Compile mandatory AGMS reports
• Align internal and group-level approvals
• Address notarial and regulatory queries

2. Reduced Entry Barriers for PT PMA under Perka BKPM No. 5/2025

Issued: October 2025

In October 2025, Indonesia’s Ministry of Investment / Investment Coordinating Board (BKPM) issued Regulation No. 5/2025, setting out updated guidelines for the implementation of risk-based business licensing and investment facilities through the Online Single Submission (OSS) system.

This regulation forms part of Indonesia’s broader investment reform agenda, aimed at enhancing ease of doing business, strengthening regulatory clarity, and attracting greater foreign direct investment (FDI).

One of the most notable updates under this regulation concerns the capital requirements for establishing a foreign-owned limited liability company (PT PMA).

Key changes

Reduced Paid-Up Capital Requirement

Under the previous framework, PT PMA companies were required to have:

• IDR 10 billion authorised and paid-up capital

Under Regulation No. 5/2025:

• The minimum paid-up capital is reduced to IDR 2.5 billion

By lowering the minimum paid-up capital requirement from IDR 10 billion to IDR 2.5 billion, the government significantly reduces the upfront financial threshold for foreign investors. This reform is intended to:

• Encourage new market entrants
• Stimulate business growth
• Improve Indonesia’s regional competitiveness
• Make company formation less capital-intensive

Important Capital Restriction

While the paid-up capital requirement has been reduced, governance safeguards remain in place.

The deposited capital:

• Must remain in the company’s account for 12 months
• Cannot be withdrawn or transferred during this period

Exceptions apply only for legitimate business purposes, including:

• Asset acquisition
• Construction of facilities
• Operational funding

This restriction ensures that paid-up capital is genuinely deployed to support the company’s business development during its initial phase.

Investment Value Requirement Remains Unchanged

Despite the reduction in paid-up capital, the minimum investment value remains at IDR 10 billion per 5-digit KBLI per project location (Excludes land and building value)

Foreign investment companies remain classified as large-scale enterprises.

Certain sectors may apply different measurement approaches, including:

• Wholesale trading
• Food and beverage services
• Construction services
• Manufacturing

Practical takeaway

The reform meaningfully lowers entry barriers for foreign investors establishing a PT PMA. However, it does not reduce the overall investment commitment required under Indonesia’s regulatory framework.

Investors should carefully structure:

• Capital planning
• KBLI selection and alignment
• Project location strategy
• OSS licensing submissions

to ensure compliance while optimising capital efficiency.

3. Implementation of New DGT Form 2026 (PMK 112/2025)

Effective: 1 January 2026

Effective from 1 January 2026, Indonesia’s Directorate General of Taxes (DGT) has introduced a revised DGT Form format applicable for Fiscal Year 2026, pursuant to Minister of Finance Regulation (PMK) No. 112/2025.

The updated format is designed to enhance tax compliance, improve reporting transparency, and strengthen oversight of cross-border transactions. The reform aligns with Indonesia’s broader objective of modernising tax administration and reinforcing documentation standards in international dealings.

Who Is Affected?

The new DGT Form applies to Indonesian companies that engage in transactions with overseas parties, including related-party and cross-border arrangements.

Failure to submit the updated DGT Form in accordance with PMK 112/2025 may result in:

• Administrative penalties
• Disallowance of tax treaty benefits (where applicable)
• Increased audit scrutiny
• Potential tax exposure

Given the heightened focus on cross-border compliance, accurate and timely submission will be critical.

Action Required

Companies should take proactive steps to ensure readiness, including:

• Reviewing the revised DGT Form requirements and technical specifications
• Updating internal tax documentation and reporting workflows
• Ensuring cross-border transaction records are properly maintained and aligned with the new format
• Coordinating with overseas counterparties where supporting documentation is required

The introduction of the new DGT Form signals continued strengthening of Indonesia’s tax compliance environment, particularly for international transactions. Early preparation will help mitigate reporting risks and avoid disruptions during the 2026 fiscal cycle.

4. PMK 105/2025 – Article 21 Income Tax Incentive (PPh 21)

Effective: Fiscal Year 2026

Minister of Finance Regulation No. 105 of 2025 (PMK 105/2025) introduces a government-borne Article 21 (PPh 21) Income Tax incentive as part of Indonesia’s 2026 economic stimulus programme.

Under this scheme, the government absorbs the Article 21 income tax that would ordinarily be deducted from employees’ salaries. As a result, eligible employees receive their full wages without tax deductions.

The policy is intended to:

• Boost household purchasing power
• Support tourism and labour-intensive industries
• Stimulate domestic economic activity
• Encourage tax compliance among businesses and employees

Importantly, employees are not required to submit individual applications. Eligibility is determined based on the company’s registered business classification (KLU) and payroll system.

Eligible Business Sectors (Tourism KLU Codes)

• Hotels and accommodations
• Restaurants and cafés
• Catering services
• Travel agencies
• Tour guides
• Event organisers

Employee Eligibility Criteria

Employees do not need to submit applications. Eligibility is determined based on company classification and payroll systems.

Although the incentive reduces employee tax burden, employers remain responsible for:

• Ensuring correct payroll system implementation
• Confirming business classification eligibility
• Maintaining proper reporting documentation
• Monitoring compliance with DGT guidelines

Companies should assess eligibility early to ensure accurate payroll processing for Fiscal Year 2026 and avoid misapplication risks.

What this means for your business

Indonesia’s regulatory landscape is evolving along two parallel tracks:

• Stronger corporate governance and reporting enforcement
• More flexible foreign investment entry structures

While investment barriers are being lowered in certain areas, compliance obligations — particularly in AGMS reporting and tax documentation — are becoming more structured and digitally monitored.

Businesses operating in Indonesia should proactively:

• Review AGMS timelines and documentation workflows
• Assess PT PMA capital structuring strategies
• Update tax reporting processes
• Evaluate eligibility for available tax incentives

How Vistra can help 

Indonesia’s evolving regulatory environment requires more than technical compliance — it requires coordination across corporate governance, licensing, tax and payroll functions.

At Vistra Indonesia, our integrated corporate secretarial, tax and payroll teams support clients in navigating these changes with confidence and control.

We can assist with:

Corporate Governance & AGMS Compliance

• End-to-end AGMS planning and documentation
• Notarial coordination and deed formalisation
• AHU Online submissions and Notification Certificate (SP) processing
• Corporate action management (director/shareholder changes, capital amendments)

PT PMA Structuring & Investment Advisory

• Capital structuring strategy under the revised paid-up capital framework
• KBLI selection and alignment analysis
• OSS licensing advisory and regulatory submissions
• Investment value compliance review per project location

Tax & Reporting Compliance

• DGT Form 2026 implementation support
• Cross-border transaction documentation alignment
• Tax treaty application review
• Ongoing corporate tax compliance advisory

Payroll & Incentive Implementation

• Assessment of PPh 21 incentive eligibility under PMK 105/2025
• Payroll system recalibration and reporting alignment
• Compliance risk review and audit readiness

Indonesia’s regulatory reforms present both opportunity and complexity. A proactive, structured approach will help businesses minimise compliance risk while leveraging available incentives.

Speak to our Indonesia specialists today to assess your regulatory exposure and implement the right compliance strategy. Email us at [email protected]. 

Let us help you navigate Indonesia’s evolving regulatory landscape with clarity and confidence.