In early August 2026, Minister of Finance Purbaya Yudhi Sadewa revealed that potential tax liabilities arising from streamlining transactions among state-owned enterprises (SOEs) under the Danantara Investment Management Agency could reach IDR 500 trillion. The statement followed a meeting between Purbaya and Dony Oskaria, Danantara’s Chief Operating Officer and Head of the SOE Supervisory Agency, who requested tax relief for the planned SOE consolidation.
The government responded by considering a three-year tax exemption for SOE consolidation activities, including mergers, liquidations, and business acquisitions within the Danantara ecosystem. Previously, Danantara’s President Director announced plans to streamline hundreds of SOEs and subsidiaries to build a more agile corporate structure.
Merger and Acquisition Trends in Indonesia
These proposed fiscal incentives take shape within a merger and acquisition (M&A) development in Indonesia. Data from the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha/KPPU) shows that 300 M&A notifications were recorded as of November 2022.
However, notifications subsequently declined following the issuance of KPPU Regulation Number 3 of 2023. Primary updates under the regulation restricted asset and sales thresholds strictly to those located or generated within Indonesia, while enforcing notification requirements when both transacting parties hold assets or revenue in the country.
Consequently, KPPU notification figures after 2023 are not directly comparable to earlier periods.
Within the SOE sector, consolidation has accelerated significantly since Danantara began operations in 2025. One example is the consolidation of seven logistics SOEs initiated in June 2026, with PT Multi Terminal Indonesia designated as the surviving entity. The consolidation aligns with initiatives to build an integrated, efficient logistics network.
The government continues to optimize SOEs and their subsidiaries’ portfolios by restructuring operations and divesting entities deemed to have limited strategic relevance.
Consolidation at this scale creates corporate governance challenges alongside tax implications. Mergers, consolidations, acquisitions, asset transfers, debt restructurings, and ownership changes can all trigger significant tax liabilities.
The central issue is, therefore, not merely whether SOE consolidation should proceed, but whether the existing tax regulation offers enough legal certainty and flexibility to execute restructurings efficiently without disproportionately impairing state revenues.
Tax Treatment of Mergers and Acquisitions
Mergers, consolidations, and acquisitions generally carry income tax consequences. Under Article 4, Paragraph 1, Letter d, Number 3, of the Law of the Republic of Indonesia Number 36 of 2008 concerning the Fourth Amendment to Law of the Republic of Indonesia 7 of 1983 concerning Income Tax, gains derived from the sale or transfer of assets via liquidations, mergers, consolidations, spin-offs, divisions, business acquisitions, or broader reorganizations constitute taxable income.
In principle, corporate asset transfers are recognized at market or fair value. Any difference between an asset’s market value and its fiscal book value represents added economic capacity for the transferor, subjecting it to income tax.
A separate issue involves tax asset revaluation. Recognizing assets at fair value during corporate transactions does not automatically constitute a formal tax revaluation.
Tax revaluation remains a distinct statutory mechanism governed by Article 19 of the Income Tax Law and Minister of Finance Regulation (Peraturan Menteri Keuangan/PMK) Number 79/PMK.03/2008 concerning Revaluation of Fixed Assets for Tax Purposes. Under these rules, any increase in fixed asset value above fiscal book value is generally subject to a 10% final income tax.
Previously, the government offered reduced tax rates of 3%, 4%, or 6% under PMK Number 191/PMK.010/2015 based on application timing during 2015-2016. That incentive was a standalone asset revaluation scheme rather than part of the tax amnesty or voluntary disclosure program.
For entities holding substantial asset portfolios, revaluation can create a material tax burden when carried out concurrently with consolidation. In restructuring SOEs, the government thus needs to ensure that the tax rules do not impose costs that undermine the economic benefits of consolidation.
Utilizing the Book Value
To mitigate immediate tax burdens arising from market-value asset transfers, the government permits taxpayers to use fiscal book value for asset transfers and acquisitions during mergers, consolidations, spin-offs, and business acquisitions.
Initially governed by PMK Number 52/PMK.010/2017, this mechanism is now incorporated into PMK Number 81 of 2024 concerning Tax Provisions within the Coretax Administration System, as amended by PMK Number 1 of 2026.
Using fiscal book value requires approval from the Director General of Taxes. Therefore, restructuring transfers do not automatically default to market value as the basis for income tax purposes.
This permission, however, is not an unconditional tax exemption. Taxpayers transferring or receiving assets must submit an application to the Director General of Taxes no later than six months after the effective date of the merger, consolidation, spin-off, or business acquisition.
Taxpayers must also pass a business purpose test and obtain a tax clearance certificate. The business purpose test requires that the primary driver of the restructuring be operational synergy and capital enhancement, rather than tax avoidance.
Furthermore, transferred business activities must be maintained by the acquiring entity for at least four years following the transaction date. The recipient’s existing core operations must also continue for four years, and acquired fixed assets cannot be transferred for at least two years unless done for corporate efficiency.
The amendments under PMK Number 1 of 2026 explicitly intend to support SOE transformations and objectives through restructuring. This support demonstrates that tax policy has begun shifting to accommodate the SOE consolidation agenda.
The question remains whether the existing book-value utilization provides enough agility to address the scale, complexity, and strategic objectives of SOE consolidation under Danantara.
Tax Incentives and Revenue Risks
Offering a dedicated tax exemption for Danantara streamlining transactions presents a pragmatic policy option to accelerate large-scale restructurings. Well-designed incentives can accelerate consolidation and improve SOE efficiency under Danantara.
Nevertheless, tax incentives pose fiscal risks. The IDR 500 trillion potential tax exposure cited by the Minister of Finance illustrates the magnitude of revenue that could be forgone if tax exemptions lack clear limits and governance.
Accordingly, any consolidation tax incentives granted to Danantara should be tightly targeted, defined in scope, and bound by clear timelines. This principle aligns with International Monetary Fund guidelines on managing tax incentives in developing economies.
The existing business purpose test under the book-value scheme must also be preserved and enforced. Fiscal relief should only be granted to restructurings backed by genuine commercial rationale and economic value creation, rather than serving as a vehicle for tax avoidance.
With appropriate design and oversight, tax incentives can support SOE consolidation and operational efficiency without excessively eroding the state revenue base.
For further assistance on M&A tax planning, Ideatax provides analysis and advisory support tailored to specific transaction needs.
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