Indonesia M&A 2026 Guide: KPPU Reg, Foreign‑to‑Foreign Nexus & PMK 1/2026

Last updated: April 29, 2026

This Indonesia M&A 2026 guide is the practical reference that deal teams, in‑house counsel, and cross‑border advisers need before signing or closing any transaction with an Indonesian nexus. Two regulatory shifts now dominate the landscape: KPPU Regulation No. 3 of 2023 (Peraturan KPPU No. 3/2023), which overhauled merger notification thresholds and extended the competition authority’s reach to foreign‑to‑foreign transactions, and the Minister of Finance Regulation No. 1 of 2026 (PMK 1/2026), issued on 22 January 2026, which rewrites the tax rules for restructurings, particularly the use of book value for mergers, demergers, and asset transfers involving state‑owned enterprises (BUMN).

Together, these changes mean that every acquisition, joint venture, or group reorganisation touching Indonesia must now pass through a dual compliance filter: competition clearance under KPPU and tax‑efficient structuring under PMK 1/2026. The stakes for getting either wrong range from administrative fines and deal delays to the unwinding of completed transactions.

Before moving to the detail, deal teams should note three immediate action points:

• Pre‑signing competition check. Run every proposed transaction through the KPPU threshold matrix, including the foreign‑to‑foreign double‑nexus test, before signing the SPA.
• Notification timing. Under KPPU Reg 3/2023, mandatory post‑closing notification must be submitted within 30 business days of the transaction’s effective date; late filings trigger fines of up to IDR 25 billion per day of delay.
• Tax sign‑offs. If the deal involves a restructuring eligible for book‑value treatment under PMK 1/2026, secure Directorate General of Taxes (DJP) approval before closing to lock in the tax benefit and avoid income tax charges on unrealised gains.

Indonesian Merger Control 2026: What Changed and Why It Matters

Snapshot of KPPU Reg No. 3/2023

Peraturan KPPU No. 3 Tahun 2023 replaced the previous KPPU Regulation No. 3 of 2012, which had governed merger notification in Indonesia for over a decade. The new regulation took effect upon promulgation in 2023 and introduced a modernised framework aligned with international best practice while retaining Indonesia’s distinctive post‑closing notification model. The full text is published on the official government gazette portal and is also available via the BPK regulations database. KPPU Reg 3/2023 covers mergers (penggabungan), consolidations (peleburan), and acquisitions (pengambilalihan) of shares or assets that may cause monopolistic practices or unfair business competition, as set out in Article 28 and Article 29 of Law No. 5 of 1999.

Thresholds and Calculation Methodology

The KPPU merger regulation establishes clear quantitative thresholds that determine whether a transaction triggers the mandatory notification obligation. These thresholds are calculated on a combined basis, meaning the merging parties’ figures are aggregated, and are applied to the most recent audited financial statements.

For general sectors, a merger notification Indonesia obligation arises when the combined entity will hold:

• Total assets exceeding IDR 2.5 trillion; or
• Total revenue (turnover) exceeding IDR 5 trillion.

For the banking sector, a higher asset threshold applies: combined assets exceeding IDR 20 trillion trigger the notification requirement, reflecting the naturally larger balance sheets of financial institutions.

Several calculation principles under the KPPU merger regulation deserve attention from deal teams:

• Consolidation requirement. Assets and revenue must be calculated at the group level, including all entities under common control, not just the direct transacting parties.
• Indonesian nexus for foreign parties. For entities domiciled outside Indonesia, only assets located in and revenue derived from Indonesian operations are counted toward the thresholds.
• Sectoral classification. If either party operates in banking, the banking threshold applies to that party’s assets; the general threshold applies to the non‑banking party.
• Exclusions. Internal restructurings within the same group may qualify for an exemption where there is no change of ultimate control, but this must be documented and defensible.

The regulation also introduced procedural changes. Notifications are now submitted through KPPU’s online portal, and the completeness review period runs for 60 business days from receipt. If the notification is deemed complete, KPPU has a further 90 business days to conduct a substantive assessment and issue its opinion.

KPPU Enforcement Trends and Practical Implications

Industry observers expect KPPU’s enforcement posture to tighten through 2026, driven by the regulator’s increasing institutional capacity and its stated priority of addressing anti‑competitive concentration in strategic sectors including digital platforms, mining, and consumer goods. The likely practical effect for deal teams includes more rigorous completeness checks, shorter response windows, and a greater willingness to impose penalties for late or incomplete filings.

The penalty regime under KPPU Reg 3/2023 is significant:

• Late notification. Administrative fines of up to IDR 25 billion for each day of delay beyond the 30‑business‑day window.
• Failure to notify. KPPU may treat non‑notification as a violation of Article 29 of Law No. 5/1999, with potential fines and, in extreme cases, an order to reverse or restructure the transaction.
• Incomplete information. Providing inaccurate or misleading data in the notification can trigger separate penalties and extend the review period.

Deal teams should use the following pre‑signing checklist to manage KPPU risk:

• Calculate combined assets and revenue at group level using audited financials.
• Confirm whether any party operates in a regulated sector with a separate threshold (banking, insurance).
• Assess the foreign‑to‑foreign nexus test if both parties are domiciled outside Indonesia.
• Budget for the notification timeline in the SPA conditions‑precedent / post‑closing obligations schedule.
• Prepare a market‑definition and competition‑impact analysis early, do not wait for KPPU to request one.

Foreign‑to‑Foreign M&A Indonesia: The Double‑Nexus Test and Worked Examples

What Triggers KPPU Jurisdiction over Foreign‑to‑Foreign Transactions

One of the most consequential aspects of the Indonesian merger control regime for cross‑border M&A Indonesia practitioners is the extension of notification requirements to transactions where neither the buyer nor the seller is an Indonesian entity. Under KPPU Reg 3/2023, a foreign‑to‑foreign transaction falls within KPPU’s jurisdiction when the parties collectively satisfy a double‑nexus test: the transaction must involve entities that have assets located in Indonesia and/or derive turnover from Indonesian operations, and the combined thresholds must be met based on those Indonesian figures.

In practical terms, this means a deal signed in Singapore between two Cayman holding companies can still require KPPU notification if the target group operates Indonesian subsidiaries or holds Indonesian assets whose value, when combined with the buyer’s Indonesian footprint, crosses the IDR 2. 5 trillion asset or IDR 5 trillion revenue threshold.

The double‑nexus test requires careful analysis because Indonesian competition law does not define “assets in Indonesia” or “revenue from Indonesia” with granular precision. Practitioner interpretation suggests that assets include tangible fixed assets, inventory, and receivables booked by Indonesian subsidiaries, as well as intangible assets (IP, licences, concessions) registered or exercised in Indonesia. Revenue is generally understood to mean sales invoiced to Indonesian customers or generated through Indonesian operations, regardless of the currency of payment.

Worked Examples: Three Realistic Scenarios

Scenario 1, Singapore buyer acquires Singapore seller; both have Indonesian subsidiaries. BuyerCo (Singapore) operates a mining services subsidiary in Jakarta with IDR 1.8 trillion in assets. TargetCo (Singapore) holds a palm‑oil processing subsidiary in Kalimantan with IDR 1.2 trillion in assets. Combined Indonesian assets total IDR 3 trillion, exceeding the IDR 2.5 trillion threshold. Conclusion: notify. The deal must be notified to KPPU within 30 business days of the effective date, even though neither transacting party is Indonesian.

Scenario 2, Foreign buyer acquires an SPV with Indonesian contracts but no in‑country assets. BuyerCo (Netherlands) acquires TargetSPV (BVI), which holds service contracts with Indonesian state‑owned oil companies but has no employees, office, or balance‑sheet assets in Indonesia. All services are performed offshore and invoiced in USD. BuyerCo has no Indonesian operations. Conclusion: unlikely to trigger notification. Neither party has assets in Indonesia, and the revenue, while economically linked to Indonesia, is not derived from an Indonesian establishment. However, if the contract revenue is substantial and the BVI entity has transfer‑pricing arrangements routing income through an Indonesian permanent establishment, the analysis may change. Recommended action: monitor and document the analysis.

Scenario 3, Carve‑out asset purchase via a foreign holding company. BuyerCo (Japan) acquires the Southeast Asian logistics division of a UK conglomerate. The division includes a wholly‑owned Indonesian subsidiary (PT LogistikIndo) with IDR 900 billion in assets and IDR 2 trillion in revenue. BuyerCo already operates PT NihonLogistik in Surabaya with IDR 2 trillion in assets. Combined Indonesian assets reach IDR 2.9 trillion. Conclusion: notify. The asset threshold is exceeded when both parties’ Indonesian operations are combined.

Due Diligence Checklist for Foreign‑to‑Foreign Deals

When advising on foreign‑to‑foreign M&A Indonesia transactions, deal teams should incorporate the following items into their due diligence and SPA drafting:

• Seller representations. Require the seller to disclose all Indonesian subsidiaries, branches, representative offices, and permanent establishments, together with audited financial statements showing assets and revenue.
• Threshold calculation worksheet. Prepare a combined threshold calculation based on the latest audited accounts of all Indonesian entities within both the buyer and target groups.
• Pre‑closing undertaking. Include a covenant that neither party will take any action to alter the composition of Indonesian assets before closing that could affect the notification analysis.
• Post‑closing notification obligation. If the thresholds are met, assign responsibility in the SPA for preparing and filing the KPPU notification within the 30‑business‑day window, including a costs‑sharing mechanism.
• Indonesian counsel engagement. Retain local competition counsel to run the threshold test and, if required, prepare the notification package well before the anticipated closing date.

PMK 1/2026, Tax Rules That Change Deal Economics

What PMK 1/2026 Amends and Its Scope

Minister of Finance Regulation No. 1 of 2026 (PMK 1/2026), promulgated on 22 January 2026, is the fourth amendment to PMK 81 of 2024, which governs taxation provisions for the implementation of Indonesia’s Core Tax Administration System (Sistem Inti Administrasi Perpajakan / Coretax). PMK 1/2026 focuses specifically on the tax treatment of mergers, consolidations, demergers, and asset transfers, with a particular emphasis on expanding the circumstances under which taxpayers, especially BUMN and their subsidiaries, can use book value (nilai buku) rather than fair market value for the transfer of assets in restructurings. The full regulation text is published on the Ministry of Finance’s official legal database (JDIH Kemenkeu).

The regulation’s key features include:

• Expanded book‑value scope. BUMN and their subsidiaries can now transfer assets at book value for a wider range of restructuring scenarios, including intra‑group mergers, spin‑offs, and asset injections, provided DJP approval is obtained.
• Stricter compliance conditions. Article 393(1)(c) of the amended PMK 81/2024 (as revised by PMK 1/2026) requires that taxpayers seeking book‑value treatment meet specified tax‑compliance conditions, including up‑to‑date filing and payment of all outstanding tax obligations.
• DJP approval requirement. The use of book value is not automatic, taxpayers must apply to and receive approval from the Director General of Taxes before the restructuring takes effect.

Tax Consequences by Transaction Type

Understanding the tax treatment of mergers Indonesia is critical for structuring any deal with a restructuring component. PMK 1/2026 creates different tax outcomes depending on the transaction structure:

The practical impact for deal structuring Indonesia is substantial. Where a group reorganisation precedes or follows an M&A transaction, for example, a pre‑sale carve‑out of assets into a clean SPV, the availability of book‑value treatment can save tens of billions of rupiah in upfront tax costs. Conversely, failure to secure DJP approval before executing the restructuring means the default fair‑market‑value treatment applies, creating an immediate and potentially large tax liability.

Pre‑Closing Tax Steps Under PMK 1/2026

Deal teams planning a restructuring that will rely on book‑value treatment should build the following steps into their transaction timeline:

• Tax compliance audit. Confirm that all entities involved in the restructuring are current on tax filings and payments, PMK 1/2026 conditions this on full compliance.
• DJP application. Submit the application for book‑value approval to the DJP, including the restructuring plan, financial statements, and evidence of tax compliance. Allow at least 30–60 days for processing.
• Transfer pricing documentation. If the restructuring involves cross‑border elements or related‑party transfers, prepare transfer pricing documentation supporting the book‑value approach and demonstrating that the restructuring has legitimate business substance.
• Withholding tax review. Identify any withholding tax obligations that may arise from deemed distributions, loan forgiveness, or IP transfers embedded within the restructuring.
• Closing condition. Include DJP approval as a condition precedent to closing in the transaction documents, so that the restructuring does not proceed if the tax benefit is denied.

Deal Structuring Indonesia: Integrating KPPU Filing and PMK 1/2026 Tax Steps

Combined Timeline, From Signing to Post‑Closing

One of the most common errors in cross‑border M&A Indonesia transactions is treating competition clearance and tax structuring as separate workstreams that converge only at closing. In practice, the timelines interact, and delays on either track can derail the deal. The following table illustrates a typical integrated timeline:

Structuring Options and Sample SPA Clauses

The choice between a share deal, an asset deal, and a hybrid structure has direct implications for both KPPU notification and PMK 1/2026 tax treatment. A share acquisition may be simpler from a tax perspective (no deemed disposal of underlying assets) but still triggers KPPU thresholds if the combined group exceeds the limits. An asset deal offers more flexibility in carving out specific businesses but creates potential book‑value and transfer‑pricing complexity under PMK 1/2026.

The following sample clauses (provided as illustrative examples only, not legal advice) show how deal documents can address both tracks:

Sample Clause 1, KPPU notification obligation (post‑closing).

“Within five (5) business days following Closing, the Buyer shall, at its sole cost, prepare and submit a complete notification to KPPU in accordance with Peraturan KPPU No. 3 Tahun 2023 and shall use reasonable endeavours to respond promptly to any requests for information or documents from KPPU during its review. The Seller shall cooperate in providing such information and documents as the Buyer reasonably requires for the notification.”

Sample Clause 2, DJP book‑value approval as condition precedent.

“Closing shall be conditional upon the Seller having received written approval from the Director General of Taxes confirming that the Restructuring (as defined in Schedule [X]) qualifies for book‑value treatment under PMK 81/2024 as amended by PMK 1/2026. If such approval has not been received by the Long Stop Date, either party may terminate this Agreement by written notice.”

Sample Clause 3, Escrow for potential KPPU remedies.

“The parties shall deposit an amount equal to [●]% of the Purchase Price into an escrow account, to be released upon the earlier of (a) KPPU issuing a no‑objection opinion, or (b) the expiry of the KPPU review period without the imposition of conditions or remedies. In the event KPPU requires divestiture or behavioural remedies, the escrow amount shall be available to fund compliance costs.”

Merger Notification Indonesia: Compliance Checklist and Enforcement

Notification Package Checklist

A complete KPPU notification package under Reg 3/2023 should include the following documents and data. Deal teams are advised to begin assembling these materials well before the 30‑business‑day filing window opens:

• Transaction documents. Signed SPA, shareholders’ agreement, and any ancillary agreements (e.g., TSA, IP licence).
• Corporate structure charts. Pre‑ and post‑transaction organisational charts showing ultimate beneficial ownership.
• Audited financial statements. Latest audited financials for all parties (consolidated) and for each Indonesian entity separately.
• Market data. Relevant product and geographic market definitions, market‑share estimates, and competitive landscape analysis.
• Board approvals. Resolutions of the boards of directors and commissioners authorising the transaction.
• Regulatory approvals. Copies of any sector‑specific approvals already obtained (e.g., OJK for financial institutions, Ministry of Investment / BKPM).
• Power of attorney. If filing through local counsel, a notarised power of attorney from the filing party.

Remedies, Settlement Practice, and Penalties

KPPU’s remedial toolkit under the current regulation includes structural remedies (full or partial divestiture), behavioural remedies (restrictions on pricing, market access, or bundling practices), and conditions attached to its clearance opinion. Early indications suggest that KPPU increasingly favours behavioural remedies for transactions in digital and platform markets, while structural remedies remain the norm for horizontal mergers in traditional sectors with high concentration levels.

The penalty framework is the strongest motivator for compliance. Late notification carries fines of up to IDR 25 billion per day, with no statutory cap tied to duration. Complete failure to notify can result in KPPU treating the transaction as a violation of Law No. 5/1999 Article 29, which opens the door to fines, disgorgement, and, in the most severe cases, an order to unwind the transaction. While full unwinding remains rare, the reputational and commercial disruption of a KPPU enforcement action is a material deal risk that should be disclosed in SPA risk schedules.

Reporting Obligations by Entity Type

Conclusion and Next Steps

The convergence of KPPU Reg 3/2023 and PMK 1/2026 makes 2026 a year in which no Indonesia‑touching transaction can afford to treat competition and tax compliance as afterthoughts. This Indonesia M&A 2026 guide has outlined the thresholds, the foreign‑to‑foreign double‑nexus test, the expanded book‑value rules, and the practical drafting tools that deal teams need. The following next steps are recommended:

• Run the KPPU threshold matrix and foreign‑to‑foreign nexus analysis for every live or pipeline deal.
• Map the DJP book‑value application timeline against the anticipated signing and closing dates.
• Update SPA templates to include KPPU notification covenants, DJP approval conditions precedent, and escrow mechanics.
• Engage local Indonesian counsel early, before signing, to prepare the notification package and tax application concurrently.

Sources

1. Peraturan.go.id, KPPU Regulation No. 3 of 2023 (PDF)
2. Peraturan BPK, Peraturan KPPU No. 3/2023
3. Kemenkeu JDIH, PMK 1/2026
4. Hukumonline, PMK 1/2026 regulatory commentary
5. Hukumonline, KPPU Reg 3/2023 commentary
6. ARMA Law, KPPU Reg 3/2023 practical update
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