Understanding the Latest Tax Holiday

The Indonesian Ministry of Finance (MoF) has recently introduced Regulation No.PMK-1301 as the latest step in expanding Tax Holiday facilities for new investments in Pioneer industries. In this fifth revision, the Indonesian government continues its efforts to improve the investment climate and ease of doing business. While the benefits of the Tax Holiday facilities remain the same as in the previous version, this update brings significant changes in administrative, procedural, and eligibility requirements.

PMK-130 revises the criteria that potential recipients of these facilities must meet. One of the key requirements is that the company must represent a Pioneer industry and have the status of an Indonesian legal entity. They must also have a plan for new capital investment that has not received decisions regarding specific tax facilities such as Tax Holiday, Tax Incentives, or additional deductions for new labor-intensive industries. The new capital investment should be at least IDR 100 billion, and the company must meet the debt-to-equity ratio required for tax purposes. Additionally, companies must commit to realizing their investment plan within a maximum of one year after the Tax Holiday approval is granted.

Apart from changes in eligibility criteria, PMK-130 also introduces potential benefits concerning the "amount" of investment counted for National Strategic Projects (PSN). This is related to "spin-off" businesses that can support PSN. This is an innovative step that allows investment in Pioneer industries to support national strategic projects, creating greater synergy in economic development.

 

Source: PWC


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