IIFC Law Ratified: Investors Eligible for 50-Year 0% Corporate Tax
JAKARTA, DDTCNews – A 0% corporate income tax facility for up to 50 years has officially become one of the incentives offered at the Indonesian International Financial Centre (IIFC), following the ratification of the IIFC Law. This topic is among those covered by the national media today, Wednesday (22/7/2026).
However, that rate does not apply to multinational corporations satisfying certain criteria covered under the global minimum tax (GMT) scheme. This clarification is one of the key provisions in the IIFC Law, which was passed at yesterday's plenary session of the House of Representatives (Dewan Perwakilan Rakyat/DPR in Indonesian).
Director General of Financial Sector Stability and Development, Herman Saheruddin, stated that the 0% corporate income tax incentive does not imply investors are automatically exempt from tax. This is because multinational enterprise groups fulfilling the GMT criteria remain subject to GloBE Rules.
Herman also added that the government is currently drawing up a classification of business activities eligible for the 0% corporate income tax incentive. Since the formulation of tax incentive policies for the financial centre is still ongoing, the final provisions will be set out in detail in a Government Regulation (Gov. Reg.).
"They [investors/entrepreneurs receiving 0% income tax] must certainly meet certain criteria. Most importantly, they must bring foreign investment into the IIFC. It will be regulated under a government regulation," he said.
Meanwhile, Minister of Finance, Purbaya Yudhi Sadewa, stated that the construction of a financial centre is of great importance, given Indonesia's strategic position as the largest country in South-East Asia and a member of the G20.
In his view, the presence of a financial centre is also vital for attracting global investors, strengthening economic resilience and diversifying sources of development financing as well as consolidating Indonesia's position as an emerging economic powerhouse on the international stage.
"The presence of the IIFC is not intended to replace the existing domestic financial system, but rather to complement it with a world-class, integrated ecosystem," said Purbaya.
To achieve these objectives, Purbaya stated that the IIFC Law is built on 3 main pillars. The first pillar is stated capital access and investment. Indonesia's financial centre is intended to attract sustainable flows of foreign stated capital and quality portfolio investment as a source of long-term financing.
The second pillar is innovation and governance. The financial centre will establish a comprehensive financial services ecosystem, employing advanced technology, world-class cybersecurity systems and good governance.
The third pillar is strengthening competitiveness and national human resource capacity. According to Purbaya, the establishment of the financial centre will drive job creation for highly skilled human resources as well as technology and knowledge transfer in the financial sector. In the long term, these efforts may reduce the cost of stated capital and enhance the competitiveness of the national economy.
In addition to the above topic, there is also coverage of an inheritance tax clause in the IIFC Law. There is further discussion relating to cigarette excise policy this year, a proposal for zakat to become a tax credit, tax audits and other matters.
The following is a full review of the tax-related articles.
DGT: Not All Tax Incentives at IIFC Have a 50-Year Duration
The government is still finalising the scheme, types, amounts and duration of tax incentives to be offered to investors at the Indonesian International Financial Centre (IIFC), also known as the financial centre.
Director General of Taxes, Bimo Wijayanto, stated that the government has not yet decided on the duration of these tax incentives. In his view, the period for granting tax incentives at the financial centre will vary depending on the type of incentive.
"There are several [tax incentives] that are indeed regulated separately. As such, not all of them are for 50 years," he said. (DDTCNews/Bisnis Indonesia)
No Cigarette Excise Tariff Hikes This Year
The government is seeking a compromise on tobacco excise policies. The solution being pursued is to forgo a tariff increase and instead add brackets to the cigarette excise structure. This middle ground is considered capable of maintaining industry resilience and employment whilst safeguarding state revenues.
The absence of a tobacco excise (cukai hasil tembakau/CHT in Indonesian) tariff hike represents one of the positive catalysts for the tobacco products industry (industri hasil tembakau/IHT in Indonesian), particularly for large manufacturers; thus, they need not adjust prices amidst pressure on people's purchasing power.
Sumber Bisnis within the fiscal authority explained that the plan to add brackets or groupings to tobacco product categories will be applied to the machine-made clove cigarette (sigaret kretek mesin/SKM in Indonesian) category, increasing from the current two brackets to three brackets. (Bisnis Indonesia)
Bimo Responds to Proposal for Zakat as a Tax Credit
Director General of Taxes, Bimo Wijayanto, stated that the Directorate General of Taxes (DGT) has held discussions with the Indonesian Ulema Council (Majelis Ulama Indonesia/MUI in Indonesian) regarding the tax treatment of zakat payments. In his view, the assessment of tax treatment for zakat must take into account the aspect of fairness across different religious communities.
"Under the current rules, we must act fairly for all religious communities. As such, it is indeed not treated as a tax credit, but rather as a deductible expense," he said.
Although the relevant regulation will not be revised in the near future, Bimo continued, the government remains open to discussing the tax treatment of zakat. "We are open to discussion," he said. (DDTCNews)
IIFC Law Includes Special Clauses on Inheritance Tax and Seed Capital
The Indonesian International Financial Centre Law (IIFC Law), approved by the House of Representatives at a plenary session, contains various special tax provisions not included in the initial draft.
The newly added provisions not included in the initial draft cover special tax treatment of inheritance and seed capital in the IIFC.
"There are also provisions on tax treatment of inheritance and tax treatment of seed capital in the IIFC," said Deputy Chairperson of House Commission XI, Mohamad Hekal, at the plenary session. (DDTCNews)
Director General of Taxes: Cooperation with Babinsa Limited to Information Coordination
Director General of Taxes, Bimo Wijayanto, affirmed that the involvement of Village Supervisory Non-Commissioned Officers (Bintara Pembina Desa/Babinsa in Indonesian) and Bhayangkara Community Security and Order Advisors (Bhayangkara Pembina Keamanan dan Ketertiban Masyarakat/Bhabinkamtibmas in Indonesian) in supervising taxpayers' compliance is limited solely to coordination and exchange of information.
Bimo explained that tax officers may establish cross-agency cooperation at the subdistrict or village level, including with Village Supervisory Non-Commissioned Officers and Bhayangkara Community Security and Order Advisors. However, he emphasised that such cooperation is not for the purpose of conducting tax audits or collecting taxes.
"There is no need to make a controversy out of the fact that tax officers will involve Babinsa and the like. It is simply information coordination. As such, in gathering information, we cooperate with stakeholders, including Babinsa and Bhabinkamtibmas," he stated. (DDTCNews)
DGT Monitors 40 Companies Suspected of Breaching Tax Rules
Minister of Finance, Purbaya Yudhi Sadewa, revealed that the DGT is targeting 40 companies suspected of engaging in tax reporting practices that do not comply with the applicable provisions.
These companies are said to conduct a large proportion of their transactions on a cash basis, resulting in lower tax payments than the mandatory amount.
"Some companies are allegedly engaging in practices that do not comply with existing rules. Most of their trade is cash-based. Therefore, they pay lower taxes, lower VAT, because what is reported is lower than the actual amount," he claimed. (Kontan)
