Minister of Finance Regulation Number 1 of 2026 Expands Book Value Scheme and Tightens Tax Compliance Requirements

Introduction

On January 22, 2026, the Ministry of Finance issued Minister of Finance Regulation Number 1 of 2026 on the Fourth Amendment to Minister of Finance Regulation Number 81 of 2024 on Tax Provisions to Support the Implementation of the Core Tax Administration System (“MoF Regulation 1/2026”). MoF Regulation 1/2026 governs the use of book value, rather than market value, in the transfer of assets for business restructuring, including mergers, consolidations, spin-offs, and business acquisitions.

MoF Regulation 1/2026 was issued to adjust tax policies in order to support the restructuring of State-Owned Enterprises (“SOEs”). The recitals state that such adjustments are necessary to align the tax treatment of asset transfers and acquisitions using book value with the restructuring needs of SOEs. The previous provisions under MoF Regulation Number 81 of 2024 were deemed insufficient to reflect these policy adjustments; therefore, MoF Regulation 1/2026 also updates the applicable tax compliance requirements for Taxpayers.

Comparison

MoF Regulation 1/2026 amends Minister of Finance Regulation Number 81 of 2024 on Tax Provisions to Support the Implementation of the Core Tax Administration System (“MoF Regulation 81/2024”), as lastly amended by Minister of Finance Regulation Number 54 of 2025. The following is a comparison between the provisions of MoF Regulation 1/2026 and those of MoF Regulation 81/2024, as amended.

Key Provisions

Strategic Redefinition of State-Owned Enterprises (“SOEs”)

MoF Regulation 1/2026 redefines SOEs in tax provisions. Under Article 1 item 135, SOEs include business entities meeting one of the following criteria:

1. All or the majority of their capital is owned by the Republic of Indonesia through direct participation; or

2. The Republic of Indonesia holds special rights in such business entities.

This provision categorizes business entities as SOEs for tax purposes even if state share ownership is not a majority, provided the state maintains control through special rights held by the Republic of Indonesia.

Use of Book Value and Expansion of Business Spin-off Criteria

In business restructuring, asset transfers principally use market value. However, Taxpayers may use book value after obtaining approval from the Director General of Taxes (“DGT”) as stipulated in Article 392 paragraph (1) and paragraph (2). Article 392 paragraph (6) and paragraph (7) govern the types of business spin-offs eligible to use book value, which include:

1. SOE Taxpayers receiving additional state capital participation from the Republic of Indonesia, provided the spin-off is carried out to establish an SOE holding company; and

2. Corporate Taxpayers performing business separation in connection with SOE restructuring, provided that the restructuring was carried out no later than the beginning of the 2021 Tax Year and approval has been obtained from the head of the government agency administering government affairs in the field of SOE regulation.

Business Acquisition Scheme for SOEs

Article 392 paragraph (8) letter b governs the use of book value in business acquisitions between domestic Corporate Taxpayers carried out in the context of SOE restructuring. The use of book value may be applied if the share transfer covers more than 50% of the total fully paid-up shares with voting rights, or provides the ability to determine the management or policies of the transferred Taxpayer. This provision also requires that the business transfer is not conducted through the sale and purchase or exchange of assets and that approval has been obtained from the authorized agency.

Compliance Requirements and Provisions on Asset Transferability

MoF Regulation 1/2026 regulates tax compliance requirements applicable to all Taxpayers. Article 393 paragraph (1) letter c requires that every involved Taxpayer must fulfill the provisions to be granted an SKF to use book value. Furthermore, Article 393 paragraph (2) letter e stipulates a prohibition on asset transferability for a period of 2 (two) years, with an exception if the transfer is conducted for corporate efficiency purposes.

Administrative Requirements and Supporting Documents

To use the book value facility, Taxpayers must submit an application attaching supporting documents in accordance with the provisions. Article 394 stipulates that Taxpayers performing spin-offs or business acquisitions in the context of SOE restructuring must attach an approval letter from the head of the government agency administering government affairs in the field of SOE regulation. If the application is incomplete, the Director General of Taxes shall request document completeness within a period of 15 (fifteen) working days. If such document completeness is not fulfilled, the application shall be deemed not submitted.

Exemption from Sanctions and Policy Evaluation

Article 405 paragraph (4) stipulates that Taxpayers who have obtained approval for the use of book value shall not be subject to recalculation to market value if, after the entry into force of MoF Regulation 1/2026, such Taxpayers subsequently perform a merger, consolidation, spin-off, or business acquisition. Additionally, MoF Regulation 1/2026 inserts Article 406A which grants authority to the Minister of Finance to evaluate the provisions on the use of book value within a maximum period of 3 (three) years.

Transitional Provisions

Article II governs the treatment of applications and decisions on the use of book value existing prior to the entry into force of MoF Regulation 1/2026. Approvals for the use of book value issued before MoF Regulation 1/2026 takes effect remain valid provided they meet the provisions of the previous regulation, whereas applications submitted before January 22, 2026 that have not yet received a decision from the DGT shall continue to be processed based on the provisions of MoF Regulation 81/2024 and its amendments.

Closing

MoF Regulation 1/2026 re-regulates the use of book value in asset transfers for business restructuring by adjusting the provisions in MoF Regulation 81/2024. Under this regulation, the use of book value may be applied in SOE restructuring through both business spin-offs and share acquisitions that result in control, provided that the prescribed requirements are fulfilled and approval is obtained from the authorized agency, including the head of the government agency administering government affairs in the field of State-Owned Enterprises regulation. The same provision also establishes tax compliance requirements applicable to all Taxpayers, namely the obligation to fulfill Fiscal Clearance Certificate (SKF) provisions as a prerequisite for using book value. The prohibition on asset transferability for 2 (two) years remains in effect, with an exception if the transfer is conducted for corporate efficiency purposes. Furthermore, this regulation exempts recalculation to market value for Taxpayers who have previously obtained approval for the use of book value and grants authority to the Minister of Finance to evaluate the provisions on the use of book value. To maintain process continuity, applications for the use of book value submitted before the entry into force of MoF Regulation 1/2026 shall still be processed based on the provisions of MoF Regulation 81/2024 and its amendments. Thus, Taxpayers need to ensure the fulfillment of administrative and tax compliance requirements before undertaking restructuring or related corporate actions.