Financial Centre Draft Law Deliberated: Income Tax to VAT Incentive
JAKARTA, DDTCNews - The Indonesian International Financial Centre (IIFC) Draft Law, currently being deliberated by the government together with the House of Representatives (Dewan Perwakilan Rakyat/DPR in Indonesian), also contains clauses regarding tax incentives. This topic is among the subjects covered by the national media today, Tuesday (7/7/2026).
Referring to Article 33 of the IIFC Draft Law, tax facilities within the IIFC encompass corporate income tax, value added tax (VAT)/sales tax on luxury goods (STLGs) and customs facilities. Income tax facilities are granted in the form of corporate income tax reductions, income tax reductions for professionals, exclusion as tax residents (subjek pajak dalam negeri/SPDN in Indonesian) and exemption from withholding/collection.
The corporate income tax reduction facility consists of a 100% corporate income tax reduction for entrepreneurs conducting financial business activities within the IIFC, financial-sector supporting business activities within the IIFC or non-financial business activities within the IIFC.
The IIFC Draft Law also provides a 100% income tax reduction facility for professionals in the financial services sector within the IIFC who hold foreign national status and are employed by financial-sector businesses within the IIFC.
Meanwhile, the facility in the form of exclusion as tax residents is granted exclusively to foreign nationals who have obtained a golden visa within the IIFC, insofar as the golden visa remains valid.
The income tax facility in the form of exemption from or reduction of withholding tax/income tax collection under the IIFC Draft Law is granted in respect of income derived from investments in the IIFC received by non-tax residents (subjek pajak luar negeri/SPLN in Indonesian).
In terms of 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:
- new buildings in the form of landed houses, flat units, offices, shops/shopping centres and/or warehouses for certain individuals, certain legal entities and certain ministries; and
- other certain strategic taxable goods required for construction and development within the IIFC.
In addition, imports of certain strategic taxable goods in the form of capital goods for construction and development within the IIFC are also granted a non-collection VAT facility.
Meanwhile, certain strategic taxable services include:
- rental services for landed houses, flat units, offices, shops/shopping centres, and/or warehouses supplied to individuals, legal entities and/or institutions conducting business activities, carrying out duties or domiciled within the IIFC;
- 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 built within the IIFC; and
- other certain strategic taxable services required for construction and development within the IIFC.
Concerning STGLs, the facility contained in the IIFC Draft Law is an STGLs exemption on supplies of luxury residential properties to individuals, legal entities and/or ministries/institutions conducting business activities, carrying out duties or domiciled within the IIFC.
Finally, the import duty facility in the IIFC Draft Law consists of an import duty exemption on imports of goods and materials for the construction and development of the IIFC. Further provisions on all such tax facilities will be regulated by a government regulation (Gov. Reg.).
In addition to the above topic, there is also coverage of provisions on turnover statement letters in the implementation of the marketplace tax. Further, there is discussion of additional allocations for transfers to regions, tax on old age security, tax incentives in the Industrial Park Draft Law and other matters.
The following is a full review of the tax articles.
Beyond Tax Incentives: Special Facilities at the Financial Centre
The Indonesian International Financial Centre Draft Law, being deliberated by the government and Commission XI, also contains clauses on special facilities, in addition to tax incentives, for parties conducting business activities within the financial centre.
The granting of other special facilities aims to establish ease of doing business. These facilities are granted to entrepreneurs, employees, professionals or other parties working within the financial centre area.
Referring to the IIFC Draft Law document, the other special facilities provided at the financial centre encompass 7 types. These special facilities consist of immigration; employment; permits; residency; golden visa; residence permits; and other facilities. (DDTCNews/Kontan)
Marketplaces to Set Merchant Turnover Statement Procedures
A domestic online merchant (seller) is required to submit certain information to marketplace providers. Such information includes, among others, a statement letter stating that the merchant's turnover does not exceed IDR500 million.
The statement letter must be submitted for the merchant to be excluded from the collection of Article 22 Income Tax by the marketplace provider. The statement letter is prepared as per the format listed in the appendix of the Ministerial Regulation (MoF Reg.) 37/2025. Meanwhile, procedures for its submission shall comply with the provisions of the marketplace provider.
“Procedures for the submission of information…are determined by the Other Party [marketplace provider],” reads Article 6 paragraph (8) of MoF Reg. 37/2025. (DDTCNews)
JHT Deemed Social Savings, House Calls for Income Tax Review
House Commission IX member, Nurhadi, has requested that the government review the application of final Article 21 Income Tax on the disbursement of old age security (jaminan hari tua/JHT in Indonesian). He considers old age security to be social savings that workers can use amid growing threats of termination of employment (pemutusan hubungan kerja/PHK in Indonesian) as is currently the case.
"The state must not regard JHT funds merely as a tax revenue object, as, in essence, old age security constitutes workers' social savings accumulated from their years of labour to prepare for retirement, termination of employment or other emergency situations," he said.
According to Nurhadi, the widespread termination of employment across various sectors should be the government's primary consideration in formulating fiscal policies. Tax policies set by the government should not undermine the primary objective of the social security programme, namely to provide protection for workers after they no longer earn income. (DDTCNews)
Rise of Transfers to Regions to Pay Contract Staff Salaries
Minister of Finance, Purbaya Yudhi Sadewa, plans to provide additional funding through transfers to regions (transfer ke daerah/TKD in Indonesian) to local governments to assist in paying the salaries of government employees on fixed-term contracts (pegawai pemerintah dengan perjanjian kerja/PPPK in Indonesian).
Purbaya stated that the additional transfers to regions apply to local governments whose personnel expenditure allocation still exceeds 30% of the local government budget (anggaran penerimaan dan belanja daerah/APBD in Indonesian). This policy is expected to provide greater fiscal space for regional governments, including to pay the salaries of government employees on fixed-term contracts.
"This will later be covered and regulated as such in the State Budget Law. For regions whose personnel expenditure exceeds 30%, the Ministry of Home Affairs will arrange additional expenditure from the central government there," he said. (DDTCNews)
Government Proposes Tax Incentives in Industrial Park Draft Law
The government, in deliberations on the Industrial Park Draft Law, has proposed various tax facilities for industrial parks.
Director General of Industrial Resilience, Regional Affairs and International Industrial Access at the Ministry of Industry, Tri Supondy, stated that tax facilities are necessary to drive the national development of industrial parks in line with the government's targets.
"[The Industrial Park Draft Law] needs to regulate the granting of facilities and concessions to allow development to be increasingly competitive, one of which is through the granting of various fiscal facilities," he said at the Working Committee meeting on the Industrial Park Draft Law with House Commission VII. (DDTCNews)
IIFC to Have Dedicated Court
The contents of the Indonesian International Financial Centre (IIFC) Draft Law being deliberated by the government and the House of Representatives also contain clauses regarding the IIFC Court. The establishment of the IIFC will enable the government to establish a special court to handle various disputes within the area.
"The IIFC Court shall independently manage case administration, registry, operations, administration, budget, personnel, technology systems, facilities, administration of the enforcement of decisions, execution and other non-judicial matters," reads Article 22 paragraph (2) of the IIFC Draft Law.
Specifically, the IIFC Court has exclusive jurisdiction to examine, adjudicate and decide 5 types of cases, including cases arising from the granting of tax facilities. (DDTCNews)
