Minister of Economy Purbaya Yudhi Sadewa has confirmed that the government will once again extend the tax reduction incentive, or tax holiday, through 2026. This extension will be followed up through the drafting of technical regulations by the Ministry of Finance.

Director General of Economic and Fiscal Stability at the Ministry of Finance, Febrio Nathan Kacaribu, said that the government is currently preparing a new Minister of Finance Regulation (PMK) to regulate the extension of the tax holiday.

“The tax holiday will continue. So the PMK is currently being processed to extend it into 2026,” Febrio told reporters in Jakarta on Wednesday (December 24, 2025).

However, Febrio emphasized that the new regulation will not only extend the validity period of the incentive, but will also be adjusted to comply with the global minimum tax (GMT) provisions agreed upon under the OECD framework.

With the implementation of the GMT, tax holiday incentives can only be granted up to a minimum tax rate of 15 percent, rather than 22 percent as stipulated under the previous rules. This means that the tax reduction that can be provided amounts to 7 percent of the corporate income tax rate.

“Because of the global minimum tax, we can only provide tax holidays up to 15 percent. So from the 22 percent rate reduced to 15 percent, the difference is 7 percent,” Febrio explained.

Under the new scheme, tax exemptions for investors in pioneer industries will no longer be granted at a full 100 percent. Meanwhile, the 22 percent corporate income tax rate has officially been abolished.

For information, based on Minister of Finance Regulation (PMK) No. 69 of 2024, the previous tax holiday incentive was only valid until December 2025. The government has also recorded several extensions of this corporate income tax reduction policy in the past.