Incentives for Investment

Incentives Policy

Incentives for Investment

Super Deduction Tax

Government Regulation No. 45/2019

Labour Intensive
Industry

60%
  • Domestic taxpayers who open a new business or expand their existing businesses in labor intensive sectors could enjoy a net income tax deduction of 60% of the capital they invested as fixed assets

MoF Regulation No 16/2020

Vocational Training
Program

200%
  • Domestic taxpayers who conduct working program, interships and or educational activities to develop human resources based on certain competency could obtain a gross income tax deduction as high as 200 percent of the funds they had spend for the activities
MoF Regulation No 128/2019

Research
& Development

300%
  • Domestic taxpayers who conduct R&D in Indonesia could obtain a gross income tax deduction as high as 300 percent of the cost of their R&D activities


MoF Regulation No 153/2020
Tax_Holiday

Tax Holiday

(MoF Regulation No.130/PMK.010/2020 )

Requirement:
  • Minimum investment valued IDR 500 billion
  • Applied to 18 industry groups
  • 100% reduction rate (single rate)
  • 50% CIT reduction for the next 2 (two) years
    • Mini_Tax_Holiday_New

    Mini Tax Holiday

    (MoF Regulation No.130/PMK.010/2020)

    Requirement:
  • Minimum investment valued between IDR 100 and IDR 500 billion
  • Applied to 18 industry groups
  • 50% reduction rate (single rate)
  • 25% CIT reduction for the next 2 (two) years
    •  

    18 industries entitled to apply tax holiday in Indonesia

    1. Automotive industry and its main components including electric vehicle.
    2. Basic inorganic chemical industry.
    3. Digital economy data processing, hosting and its related activities.
    4. Economic infrastructure including a power plant, a toll road with low IRR, a seaport with low IRR, oil tanking, TOD.
    5. Industrial manufacturing of irradiated, electromedical or electrotherapy equipment.
    6. Industrial manufacturing of main components for electric power generation machinery.
    7. Machinery industry, the making of main engine or components for machine.
    8. Main components for electronic industry or telematics equipment, such as semiconductor wafers, lcd, etc.
    9. Main raw material for the pharmaceutical industry.
    10. Manufacture of the main component for aircraft and supporting activities for the aerospace industry.
    11. Manufacture of the main component for train.
    12. Oil & gas refining without or integrated with its derivatives industry.
    13. Organic based chemical industry sourced from agricultural, plantation or forestry products.
    14. Petrochemical industry from oil, gas, or coal, without or with derivative.
    15. Processing industries based on agriculture, plantation, or forestry products, with or without its derivatives.
    16. Robotic component industry for manufacturing machinery industry.
    17. Shipbuilding industry and manufacture of its main component.
    18. Upstream base metal industry / smelter (iron steel or others).
    Tax_allowance

    Tax Allowance

    Government Regulation No. 78 / 2019
    Ministry of Finance Regulation No. 96/2020

    Update: The granting of Income Tax  Facility is carried out by the Chairman of BKPM on behalf of the Minister of  Finance.

    Criteria:
  • Absorbing certain numbers of local labour
  • Certain value of  investment for export  oriented industries
  • Using certain  percentage of local  content
    • Incentive Scheme:
  • Accelerated depreciation of  tangible fixed assets and  accelerated amortization of  intangible assets
  • Imposition of Income  Tax on dividends of 10%
  • Compensation for losses of  more than 5 years but not  more than 10 years
    • Benefit:
  • 30% of the investment value in the form of tangible fixed assets
  • Reduction of corporate net income tax for 6 years, 5% each year

    • Tax allowance offered for investment in 183 business activities

    Oil & Gas Industry
  • Oil refinery
  • Liquefied Natural & Petroleum Gas
  • Lubricant
    • Power Generation
  • Geothermal
  • Alternative/renewable energy
    • Agriculture
  • Cattle breeding & Farming
  • Corn plantation
  • Soya plantation
  • Rice Farming
  • Tropical Fruits
    • Manufacturing & Industry
  • Iron & Automotive Ind,
  • Steel
  • Clothing
  • Semi Conductors
  • Electronic Components
  • Computer
  • Communication Devices
  • Television
  • Tires
  • Pharmaceutical
  • Cosmetics
  • Fish & Shrimp processing

    • Import Duty Facility

    MoF Regulation No.66/PMK.010/2015
    Chairman of BKPM Regulation No. 16/2015

    Criteria:

    • Exemption of import duty on imported capital goods (machines) for 2 years during construction period.
    • Exemption of import duty on imported goods and material for production for 2 years during initial production (or 4 years for companies using locally-produced machines min.30% from total value of machines for production).
    • Equitable and Non discriminatory treatment against country of origin