Corporate M&A Compliance Guide in Indonesia 2026: KPPU Regulations and PMK 1/2026 Tax Framework

Merger and acquisition (M&A) transactions in Indonesia in 2026 have entered a new regulatory era marked by stricter competition supervision and updated corporate tax frameworks. A corporate transaction is no longer merely a commercial agreement between buyers and sellers, but a multi-layered legal process requiring rigorous competition compliance validation and fiscal efficiency. Management of limited liability companies (PT) must recognize that procedural notification failures or tax miscalculations can trigger severe administrative fines or judicial invalidation of completed deals.

Under Indonesian law, a merger is defined as a legal act where one or more business entities merge into an existing entity, transferring all assets and liabilities by operation of law and terminating the legal existence of the merging entities. Conversely, an acquisition refers to acquiring shares or assets that results in a change of ultimate control over the target company. The statutory backbone for corporate actions is anchored in Law No. 40 of 2007 on Limited Liability Companies, as amended by Law No. 6 of 2023 (Job Creation Law) and updated by Law No. 1 of 2026 concerning Criminal and Administrative Sanctions.

The first critical aspect to examine before signing a Share Purchase Agreement (SPA) is competition review by the Business Competition Supervisory Commission (KPPU). Under KPPU Regulation No. 3 of 2023, Indonesia operates a post-merger notification regime. Companies are required to submit an electronic notification via the KPPU Portal within 30 business days from the date the transaction becomes legally effective. Late notification carries severe statutory penalties of IDR 1 billion per day of delay, capped at a maximum fine of IDR 25 billion under Government Regulation No. 44 of 2021.

Mandatory notification to KPPU is triggered when a transaction meets combined financial thresholds in Indonesia. For non-banking sectors, notification is mandatory if combined total assets exceed IDR 2.5 trillion or combined annual sales in Indonesia exceed IDR 5 trillion. For the banking sector, the threshold is set above IDR 5 trillion in assets and sales (or IDR 20 trillion for banking groups). Financial thresholds are aggregated across the entire corporate group based on the latest audited financial statements, rather than isolated to the immediate contracting parties. KPPU Reg 3/2023 also applies extraterritorially to foreign-to-foreign transactions that produce a direct impact on the Indonesian market.

The second essential pillar is tax compliance under Minister of Finance Regulation No. 1 of 2026 (PMK 1/2026), promulgated on January 22, 2026. This regulation updates the tax rules governing the use of book value for asset transfers in corporate reorganizations, mergers, and demergers. Applying book value allows corporate entities to defer or eliminate Income Tax (PPh) liabilities on unrealized capital gains. To secure this tax treatment, companies must obtain formal approval from the Directorate General of Taxes (DJP) prior to closing and satisfy the statutory business purpose test, demonstrating that the restructuring is not driven primarily by tax avoidance.

Executing an M&A transaction under Indonesian corporate law requires disciplined adherence to statutory milestones. First, management must draft a proposed merger or acquisition plan and publish an announcement in at least one national daily newspaper while providing written notice to employees at least 30 days prior to the General Meeting of Shareholders (RUPS) notice. Second, obtaining RUPS approval under a qualified quorum (at least 3/4 of voting shares). Third, addressing minority buyout rights for dissenting shareholders and resolving creditor objections. Fourth, executing the merger or acquisition deed before a public notary and securing approval or notification acknowledgment from the Ministry of Law and Human Rights.

For foreign investors operating via Foreign Direct Investment entities (PT PMA), acquisition transactions must align with the Investment Positive List (Presidential Regulation No. 10 of 2021 as amended by Pres. Reg. No. 49 of 2021). Certain economic sectors impose caps on foreign equity ownership or mandate partnership requirements with local MSMEs. Failing to structure foreign shareholding in compliance with investment regulations can result in the revocation of business licenses by the Ministry of Investment/BKPM through the Online Single Submission (OSS RBA) portal.

AB & Partners Law Office recommends three strategic steps for corporate entities undertaking M&A transactions in 2026. First, conduct comprehensive legal and tax due diligence to map KPPU notification triggers and PMK 1/2026 tax documentation requirements before executing binding agreements. Second, incorporate clear conditions precedent into the SPA requiring DJP tax approvals and competition filing readiness prior to closing. Third, ensure post-merger integration complies strictly with employment regulations and timely updates to business licenses within the OSS RBA platform.