Indonesia Prepares PMK on Loan‑to‑EBITDA Ratio with Public Input

Indonesia’s Finance Ministry is preparing a PMK that limits loan costs by applying a loan‑to‑EBITDA ratio. The draft follows a series of public participation activities, including focus groups organized by the Directorate General of Taxation and the Directorate General of Economic and Fiscal Strategy. The information was provided by Yon Arsal, Senior Tax Compliance Advisor to the Minister, on 21 October 2025.

The loan‑to‑EBITDA ratio is already referenced in the Tax Harmonization Act and Government Regulation No. 55/2022, and Indonesia’s OECD transfer‑pricing profile signals its adoption. The country is shifting from a thin‑capitalisation rule to an earning‑stripping limitation in line with BEPS Action 4, while the current rule remains a debt‑to‑equity ratio of 4:1 under PMK 169/2015.

Once issued, the PMK will require corporations to report the loan‑to‑EBITDA calculation in Annex 11B of their corporate income‑tax return, replacing the sole reliance on the DER limit. This should provide clearer guidance on allowable loan costs and align Indonesia with international tax standards. Until the regulation is formalized, firms continue to use the existing DER rule. Read the full source at news.ddtc.co.id (https://news.ddtc.co.id/berita/nasional/1814627/sudah-lalui-partisipasi-publik-pmk-rasio-pinjamanebitda-siap-disusun).