Indonesia has enhanced and improved the incentives offered to businesses in a bid to spur foreign and domestic investments into the country. These incentives include long-term tax reductions for major investments, no import/excise duties, and a simplified immigration process.
Indonesia has in recent years enhanced and improved the incentives offered to businesses in a bid to spur foreign and domestic investments into the country. This was apparent when Government Regulation in Lieu of Law No. 2 Year 2022 was launched as possibly one of the most significant economic reforms since 1998. The Law removes more than 70 labor, tax, and other key laws to reduce bureaucratic inefficiencies, simplify business licensing requirements, and liberalize more industries for foreign investors.
Companies that invest a certain amount in one of the 246 priority business lines will be afforded fiscal and non-fiscal incentives. Fiscal incentives include a 50 percent corporate income tax reduction for investments between 100 billion rupiah (US$6.6 million) and 500 billion rupiah (US$33.3 million) for a period of five years and a 100 percent CIT reduction for investments over 500 billion rupiah (US$33.3 million) for a period between five and 20 years. In addition, there are tax allowances available in the form of a 30 percent reduction in the taxable income on the total investment for six years, a special withholding tax rate on dividends of 10 percent, and tax losses carried forward for up to 10 years.