Tax Incentives Proposed for the Financial Centre

JAKARTA, DDTCNews - The Indonesian International Financial Centre (IIFC) Draft Law, drafted by the government together with Commission XI of the House of Representatives, also contains clauses on tax incentives.

Referring to Article 33 of the IIFC Draft Law, tax facilities at the IIFC cover income tax , value added tax (VAT)/sales tax on luxury goods (STLGs) and customs facilities.

"Income tax facilities referred to in Article 33 letter a shall be granted in the form of a corporate income tax reduction, an income tax reduction for professionals, an exclusion from status as tax residents (SPDN) and an exemption from withholding/collection," reads Article 35 of the IIFC Draft Law, as cited on Monday (6/7/2026).

The corporate income tax reduction facility is a 100% corporate income tax reduction for entrepreneurs conducting financial business activities at the IIFC, supporting business activities for the financial sector at the IIFC or non-financial business activities at the IIFC.

The IIFC Draft Law also includes a 100% income tax reduction facility for professionals in the financial services sector at the IIFC who hold foreign national status and work for financial sector entrepreneurs at the IIFC.

The facility in the form of an exclusion from tax resident status is granted exclusively to foreign nationals who obtain a golden visa at the IIFC while the golden visa remains valid.

The income tax facility in the form of an exemption from/reduction of withholding tax/income tax collection under the IIFC Draft Law is granted on income derived from investments at the IIFC received by non-tax residents (SPLN).

In terms off VAT facilities, the facility contained in the Draft LAw is the non-collection of VAT on supplies of certain strategic taxable goods (barang kena pajak/BKP in Indonesian) and certain strategic taxable services (jasa kena pajak/JKP in Indonesian).

Certain strategic taxable goods include:

1. new buildings comprising landed houses, flat units, offices, shops/shopping centres and/or warehouses for certain individuals, certain entities and certain ministries; and
2. other certain strategic taxable goods required for construction and development at the IIFC.

In addition, imports of certain strategic taxable goods in the form of capital goods for construction and development at the IIFC are also granted the non-collection of VAT facility.

Certain strategic taxable services include:

1. rental services for landed houses, flat units, offices, shops/shopping centres and/or warehouses supplied to individuals, entities and/or institutions conducting business activities, performing duties or domiciled at the IIFC;
2. construction services for the construction of roads, bridges, new and renewable energy power plants, drinking water supply systems, telecommunications networks, energy networks, water networks, waste and/or effluent treatment installations, hospitals/clinics, health laboratories, schools, universities, government buildings, landed houses, flats, offices, shops, warehouses, terminals or other similar infrastructure constructed at the IIFC; and
3. other certain strategic taxable services required for construction and development at the IIFC.

In terms of the STLGs, the facility contained in the IIFC Draft Law is an STLGs exclusion for supplies of luxury residences to individuals, entities and/or ministries/institutions conducting business activities, performing duties or domiciled at the IIFC.

Finally, the import duty facility in the IIFC Draft Law is an import duty exemption on imports of goods and materials for the construction and development of the IIFC.

Further provisions on all of the above tax facilities will be regulated through a government regulation (Gov. Reg.).