At a Glance
Indonesia begins phased implementation of its carbon tax in 2026 under the Tax Harmonisation Law. The first phase targets coal-fired power plants (PLTU) at a rate of IDR 30 per kilogram of CO2 equivalent (CO2e), in line with a cap-and-tax approach.
Background
A carbon tax is a fiscal instrument intended to internalise the cost of greenhouse-gas emissions and accelerate the transition to lower-carbon energy. Indonesia is among the developing economies adopting the policy in stages.
Analysis
For energy and emission-intensive industries, the policy creates an incentive for accurate carbon measurement and energy-efficiency investment. Tax practitioners should expand into carbon accounting because emissions reporting will increasingly be part of compliance.
Action
Affected companies are advised to set up an emissions inventory aligned with national standards, integrate carbon reporting into their ERP, and monitor the expansion of regulated sectors.