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Jakarta Post

New regulation allows tax holidays of up to 20 years

  • The Jakarta Post

    The Jakarta Post

  /   Tue, August 25, 2015   /  02:23 pm
New regulation allows tax holidays of up to 20 years

The Finance Ministry has issued a new regulation that offers a tax holiday of up to 20 years for companies operating in one of nine specified pioneer sectors, in a bid to attract more investment and spur economic growth.

Issued on Aug. 18, replacing previous regulations on tax holidays, the regulation provides tax breaks for firms operating in Indonesia.

As opposed to the previous one, the new regulation gives a tax holiday for up to 20 years for companies considered to be in strategic sectors for growth stimulation. The old regulations were similar but did not mention the duration of the tax breaks allowed.

The new regulation also expands the range of sectors wherein the tax breaks apply from six to nine. Under the old rules, the tax-holiday facility was available for firms in six pioneer sectors '€“ base metal, oil refinery, basic petrochemicals, machinery, renewable energy and telecommunication equipment '€“ whereas the new rules have added to this list marine transportation, processing industries in special economy zones and joint public/private economic infrastructure.

The new regulation allow tax breaks for up to 100 percent of companies'€™ tax revenue for up to 15 years and extendable for 5 more. This is twice the revenue proportion and five years longer than the old regulations allowed.

Companies entitled to this facility are those with a minimum investment value of Rp 1 trillion (US$71 million), the 2015 regulation states. (ika)(++++)

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