On 22 January 2026, the Minister of Finance (“MoF”) has enacted the MoF Regulation Number 1 of 2026 regarding the Fourth Amendment of MoF Regulation Number 81 of 2024 regarding the Tax Provision in Terms of the Implementation of Core Tax Administration System (“MoFR 1/2026”), In summary, the Consideration Section paragraph (a) states that to support the transformation of State-Owned Business Entity or also known as Badan Usaha Milik Negara (“BUMN”) and the milestone of BUMN’s mission through restructuration, it is necessary to conduct the readjustment towards the policy in tax sector with regard to the use of book value on the transfer and acquisition of assets in terms of corporate action (merger, consolidation, spin-off or acquisition).
New Definition of State-Owned Business Entity or BUMN
The definition of BUMN is in accordance with the new provision as regulated in Article 1 (1) of Law Number 16 of 2025 regarding the Fourth Amendment of Law Number 19 of 2023 regarding State-Owned Business Entity. Based on Article 1 (135) of MoFR 1/2026, BUMN means business entity which fulfils at least one of the following provisions:
- the entire of majority of its capital is owned by the State of the Republic of Indonesia through direct participation; or
- constituting the privilege rights which are owned by the State of the Republic of Indonesia.
Shorter Period for the Requirement of Business Purpose Test
Article 393 (1) (b) of MoFR 1/2026 requires the taxpayer (in this matter BUMN) which transfers or receives the transferred assets in terms of corporate action by using the book value must fulfil several requirements, including the business purpose test. Based on Article 393 (2) (c) and (d) of MoFR 1/2026, at minimum of 4 (four) years after the effective date of corporate action:
- the business entity of taxpayer which transfers the asset prior to the occurrence of corporate action, should be continuously operated by the taxpayer which receives the transfer of assets; and
- the business entity of taxpayer which receives the assets in terms of corporate action, remains in operation.
Before the issuance of the MoFR 1/2026, the period that should be fulfilled for the business purpose test requirement was minimum of 5 (five) years after the effective date of corporate action. As a result of such reduction, BUMN benefit from greater flexibility and reduced post-transaction compliance duration while still being required to demonstrate genuine business purpose and continuity of operations following the corporate action.
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Published by: IABF Law Firm
Published on: 10 February 2026
