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View all search resultsNo tax for 50 years: Govt mulls over incentives for financial center
Very generous tax rules are among the incentives the government is considering to lure global investors to take part in developing the country's inaugural financial hub.
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People sit in a South Jakarta park on July 30, 2024, amid sparse greenery with a view of the Sudirman Central Business District (SCBD). (Reuters/Ajeng Dinar Ulfiana)
T
he government is considering a zero percent tax rate for 50 years as it developing potential fiscal incentives to attract global investors to the planned Indonesia International Financial Center (PFII).
Mukhamad Misbakhun, chairman of House of Representatives Commission XI overseeing finance and national development planning, explained that the proposed tax incentive aimed to draw global investments and financial services to put PFII on par with its counterparts in Singapore, Malaysia and Dubai, the United Arab Emirates.
The government was also preparing regulations to provide legal certainty, a simplified monitoring system and prudent governance in the financial sector, he added.
Misbakhun expressed confidence that a combination of incentives could boost the country’s appeal as an investment destination, while opining that the tax-free scheme should not be limited to 50 years.
“Personally, I think that [incentive] should remain in place for as long as PFII exists. But the government wants it to last for 50 years,” he said on Wednesday, as quoted by Kompas.com.
He said he hoped the incentive could entice Indonesians to repatriate their investments from special purpose vehicles (SPVs) from offshore jurisdictions such as the British Virgin Islands and the Cayman Islands as well as Malaysia’s Labuan International Business and Financial Centre.
The government envisions PFII as a special economic zone for financial services. According to Misbakhun, investors will be allowed to establish various financial institutions, including investment banks, insurance firms and pension funds, to help deepen the domestic financial market and increase PFII’s competitiveness.
