Purbaya: 0% CIT Up to 50 Years at IFFC Not a Potential Loss

JAKARTA, DDTCNews - Minister of Finance, Purbaya Yudhi Sadewa, considers the granting of a 0% corporate income tax (CIT) incentive for up to 50 years to be a strategy for attracting major investors to place their stated capital at the Indonesia International Financial Centre (IFFC).

Purbaya stated that the provision of substantial tax incentives is necessary to render Indonesia's financial centre more attractive than those of other countries, such as Singapore, Hong Kong and Dubai, United Arab Emirates.

"We need to be slightly more attractive. Why? Because we are the latest entrant [as a financial centre player]. If we are not more attractive, investors will not be interested. So there is one appealing sweetener; that is simply the nature of trade," he said, as quoted on Thursday (23/7/2026).

According to Purbaya, the economic benefits derived from investment flows will be greater than the potential reduction in tax revenue (potential loss) resulting from the 0% CIT incentive. Without the incentive, major investors may not necessarily be willing to enter the financial centre.

"There is no potential loss. Rather, we shall reap potential gain. Not from the tax itself, but from the [investment] funds used to finance construction here," he said.

Further, Purbaya also explained that funds flowing into the financial centre can be put to use — one example being the purchase of government securities (surat utang negara/SUN in Indonesian), including global bonds issued by the Indonesian government on international markets.

In his view, the greater the number of investors purchasing global bonds, the more easily the government can obtain US dollars. The government would also be less dependent on demand in global markets, and this situation is expected to help stabilise the rupiah exchange rate.

"When the government issues, for example, global bonds, there are buyers for the dollars, so the government is also not under pressure in the global market for our dollar demand. In turn, this will help stabilise our exchange rate," said Purbaya.

On another note, the government and the House of Representatives (Dewan Perwakilan Rakyat/DPR in Indonesian) have just approved the IFFC Draft Law for enactment into law. The IFFC Law will contain 10 chapters and 73 articles setting out in detail the establishment of the IFFC.

Once the IFFC Law is officially enacted, the government will issue implementing regulations through a government regulation (Gov. Reg.). The relevant government regulation will govern the operation of the IFFC, including the granting of tax incentives for investors and entrepreneurs. (rig)