Indonesia to Offer Investors a Simplified Tax-Holiday Program

  • Indonesia will unveil a simplified scheme for tax holidays and state oil firm Pertamina should be among the first to benefit, government officials said.
  • Boosting investment is a priority for President Joko “Jokowi” Widodo as household consumption – the main engine of growth for Indonesia’s economy – has remained sluggish in recent years.
  • Under the revised rules due to be signed next week by the finance minister, a company can apply for income tax relief when it requests investment permits, Suahasil Nazara, head of the ministry’s fiscal policy office, told reporters on 29 Mar 18.
  • He said the rules are also simplified so that the investment size will determine the number of years for which a company can get tax discount.
  • An investment of IDR500bn to IDR1tr will make a company eligible for five years holiday for corporate tax, Nazara said. The maximum holiday will be 20 years, given to those investing more than IDR30tr.
  • Current tax holiday rules offer a 10-100% income tax reduction for firms in “pioneering industries” for a maximum 15 years, though the minister can give an additional five years.
  • “Pioneering industries” are defined as those that, among other things, create added value and introduce technology. Among such industries are maritime transport, telecommunications, and processing of metals and agricultural products.

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