0% Income Tax for 50 Years: Incentives Planned for the IIFC

JAKARTA, DDTCNews – The government plans to grant tax incentives for 50 years to businesses operating at the Indonesia International Financial Centre (IIFC). This topic is among the reviews featured in national media today, Friday (17/7/2026).

Chairperson of the House of Representatives Commission XI, Mukhamad Misbakhun, stated that the tax incentive proposed by the government takes the form of a 0% income tax rate applied for a period of up to 50 years. These incentives offered by Indonesia's financial centre are expected to attract major investors.

"Of course, we will provide a wide array of incentives. The government will offer a 0% tax rate for up to 50 years. Personally, I think [the incentive] should remain in place as long as the IIFC exists, but the government considers 50 years," he said.

Misbakhun deems the granting of tax incentives at a financial centre for 50 years to be reasonable, given that the financial sector will continue to grow and become increasingly sophisticated and modern over the long term.

He is confident that the incentives being prepared at the financial centre will attract not only investors but also other financial sector participants, such as private banks and the Association of State-Owned Banks (Himpunan Bank-Bank Milik Negara/Himbara in Indonesian), investment companies, securities firms and so forth.

"Our hope is that those who have been spreading their investments, perhaps in the British Virgin Islands, the Cayman Islands and Labuan [tax havens], can repatriate and invest here, rather than travelling all the way to those destinations," he stated.

In addition to tax incentives, Misbakhun revealed that there are several other concessions available to investors and entrepreneurs at the financial centre, for example, ease of using foreign currencies, financial statements in foreign languages and ease of establishing a business.

To date, he continued, the government and House of Representatives are still deliberating the IIFC Draft Law and discussing the list of issues inventory (daftar inventarisasi masalah/DIM in Indonesian). Tax incentive policy at the financial centre has not yet been finalised, as discussions are still ongoing.

"So, those 50 years represent the [planned] period of tax imposition. Income tax will be imposed at 0% for a period of up to 50 years as long as the IIFC stands. That is one of the proposals," he said.

Beyond the above topic, there are also reviews concerning letters of inquiry (surat permintaan penjelasan atas data dan/atau keterangan/SP2DK in Indonesian) that lead to audits. There is further discussion on the Directorate General of Taxes' (DGT) tax receivable collection, special power of attorney, tax deposits and other matters.

Below is a full review of the tax articles.

Economists Say IIFC Incentives May Erode Domestic Tax Base

Economists view the tax incentives provided under the IIFC Draft Law as likely to shrink the government's tax revenue if not carefully structured.

Professor at the Faculty of Economics and Business, Andalas University, Syafruddin Karimi, stated that a 100% corporate income tax holiday for the financial sector, supporting sectors and non-financial sectors within the IIFC risks eroding the domestic tax base.

"The primary risk is not merely the low tax rate, but rather the shift of corporate profits from Indonesia's customs territory to the IIFC through holding structures, special purpose vehicles (SPVs), trusts, controlled transactions, management services, royalties, interest, derivatives and cross-entity contracts," he said. (Kompas/Kontan)

DGT: Fewer Than 1% of Letters of Inquiry Lead to Audits

After issuing a letter of inquiry (surat permintaan penjelasan atas data dan/atau keterangan/SP2DK in Indonesian) to a taxpayer, the Directorate General of Taxes (DGT) may proceed to the audit stage if indications of non-compliance and unfulfilled tax obligations are still found.

Director of Tax Dissemination, Service and Public Relations at the DGT, Inge Diana Rismawanti, revealed that the average SP2DK that progresses to the audit stage has consistently been fewer than 1% of the total number of SP2DKs issued in a year.

"The number of SP2DKs that escalate to audit has, on average, been below 1% of the total SP2DKs issued," she claimed. (DDTCNews)

BPK Flags Suboptimal Tax Receivable Collection by DGT

The Audit Board of the Republic of Indonesia (Badan Pemeriksa Keuangan/BPK in Indonesian) has noted that the Directorate General of Taxes (DGT) has yet to collect tax receivables optimally. This is because results of sample testing on 2025 tax receivable collection indicate that the DGT had not been implementing active collection measures according to the deadline applicable to each assessment.

Referring to the 2025 Audit Report on the Central Government Financial Statements (Laporan Hasil Pemeriksaan atas Laporan Keuangan Pemerintah Pusat/LHP LKPP in Indonesian), the Audit Board of the Republic of Indonesia noted 1,534 assessments worth IDR1.24 trillion whose statute of limitations has expired without active collection by the DGT.

"Based on further clarification, it is known that the execution of active collection was largely hampered by taxpayers that could not be located and the absence of taxpayer assets that could be confiscated to settle the tax liabilities," the Audit Board of the Republic of Indonesia wrote in the 2025 LHP LKPP. (DDTCNews)

Special Power of Attorney Must Now Include Validity Period

A special power of attorney used by a taxpayer to appoint an attorney must now include a validity period. This is one of the new points regulated under the Minister of Finance Regulation (MoF Reg.) 44/2026.

Through MoF Reg. 44/2026, the Ministry of Finance has updated the minimum information that must be included in a special power of attorney along with its format. Compared with the previous regulation, the newly added points are the specification of the matters authorised and the validity period of the power of attorney.

“The special power of attorney referred to in paragraph (1) shall be prepared with the following provisions: a. containing at least:…5. the validity period of the special power of attorney,” reads Article 7 paragraph (1) of MoF Reg. 44/2026. (DDTCNews)

Tax Remittances Up 24%: Purbaya Reveals Key Drivers

Minister of Finance, Purbaya Yudhi Sadewa, reported that national tax revenue grew by 24% through mid-July 2026.

Purbaya views this growth as evidence that tax revenue performance continues to improve. He is confident that the growth in tax remittances is also supported by improvements to the tax authority's human resources and the coretax system.

"So, we have improved the tax organisation, the way they work, the way we promote people and we have also provided strong sticks and carrots, resulting in such improvements in tax [administration]," he said. (DDTCNews)

Tax Deposits Alter 2025 LKPP Budget Realisation and Balance Sheet

The introduction of the tax deposit feature in the coretax system has had a significant impact on budget realisation and the balance sheet in the 2025 Central Government Financial Statements (Laporan Keuangan Pemerintah Pusat/LKPP in Indonesian).

Other tax revenue was recorded as having surged from IDR6.97 trillion in 2024 to IDR70.48 trillion in 2025, a growth of 733.99%. Other tax revenue in the form of tax deposits recorded in the 2025 budget realisation report is known to have reached IDR63.52 trillion.

"There was a significant surcharge in other tax revenue due to an exceptionally large volume of deposit payments," reads the LKPP 2025, as audited by the Audit Board of the Republic of Indonesia. (DDTCNews)