Government Prepares Tax Incentive Redesign: 4 Requirements

JAKARTA, DDTCNews - The government is seeking to improve the structure of tax incentives to boost investment without causing an excessive impact on revenue. This topic is one of the subjects covered by national media today, Thursday (17/9/2026).

Yon Arsal, Assistant to the Minister of Finance for Tax Compliance Affairs, said the incentives currently in force in Indonesia still have 3 gaps: a design gap, a growth-revenue trade-off gap and a global coordination gap. The design gap arises because tax incentives currently in force in Indonesia remain focused on physical investment, even as business models shift towards digitalisation.

"There is a discussion as to whether the existing incentives are still compatible with future business models," he said.

Further, the growth-revenue trade-off gap arises because tax expenditure resulting from incentives continues to grow whilst the benefits of those incentives have not been properly evaluated.

Finally, the global coordination gap arises because, to date, several incentives are ineffective in light of the application of the global minimum tax under the global anti-base erosion (GloBE) rules.

Yon said there are 4 requirements that must be fulfilled to establish sound tax incentives. First, the tax incentive must be aligned with the latest international tax structure, in particular the global minimum tax.

With the application of the global minimum tax, Indonesia needs to limit the use of the tax holiday and begin considering alternative incentive schemes.

"There are several incentive schemes compatible with the global minimum tax, such as cash grants or tax credits," said Yon.

Second, tax incentives must have strategic relevance, implying that they must be aligned with the latest economic developments. Yon said the incentives currently in force in Indonesia remain broad-based and can therefore be utilised by many sectors.

This differs from neighbouring countries, which focus the granting of tax incentives solely on the digital sector.

"Malaysia, Thailand and Vietnam grant tax holidays to the digital industry and renewable energy. In the Indonesian context, we need to think about industrial change in the future," said Yon.

Third, tax incentives must be timely, targeted and temporary. Fourth, tax incentives must be continually evaluated to ensure their benefit to the economy.

In addition to that news, there is coverage of the MoF's explanation regarding the lengthy VAT tax refund process. There is also a discussion of preparations for tax collection by marketplace operators.

Below is a full review of the tax articles.

Evaluation as the Basis for Tax Incentive Policy

Yon stated that the evaluation of tax incentives is key to ensuring that the facilities provided by the government genuinely benefit the economy.

The results of such evaluations can subsequently serve as the basis for the government to continue, redesign or revoke the tax incentives in force. According to him, the process of redesigning tax incentives is implemented with the involvement of cross-functional echelon I units within the MoF.

"The Ministry of Finance, through the Directorate General of Taxes (DGT), the Directorate General of Economic and Fiscal Strategy (Direktorat Jenderal Strategi Ekonomi dan Fiskal/DJSEF in Indonesian) and the Inspectorate General, has coordinated to evaluate the incentives that have been implemented," he said. (DDTCNews, Kontan)

Director General of Taxes Responds to DGT Officials' Rotation

Director General of Taxes, Bimo Wijayanto, stated that the rotation of officials within the DGT is continuing despite proposals for postponement or cancellation. According to him, the rotation of officials was a DGT proposal, but a number of names were subsequently found to have not undergone the assessment and talent management process.

"That is what prompted me and the Director General of Customs and Excise [Djaka Budhi Utama] to ask for the process to be postponed or cancelled for the time being. The signal would not be good for the other personnel who had worked hard to go through the assessment, take the tests and participate in talent management," he said.

He said that Minister of Finance, Suahasil Nazara, had accepted his input. According to him, Suahasil is also committed to implementing talent management and the reform process at the MoF to the best possible standard. (Liputan6.com, Antara)

MoF: VAT Refund Disbursement Requires a Process

Joni Kiswanto, Senior Policy Analyst at the Directorate General of Economic and Fiscal Strategy of the MoF, affirmed that a VAT tax refund is a taxpayer's right and must be returned to the taxpayer provided that all formal and material requirements have been satisfied.

Joni explained that there is a series of processes when an entrepreneur taxpayer submits a tax refund claim. Consequently, the tax refund is often not instantaneous and may potentially affect a company's cash flow.

"The impact on entrepreneurs is not the tax burden but the cash flow. Thus, if the VAT [refund] does not come through, entrepreneurs complain because they need to pay staff salaries and so forth," he claimed. (DDTCNews)

DGT: 4 Major Marketplaces Ready to Collect Art. 22 Income Tax

The Directorate General of Taxes (DGT) has stated that the 4 largest marketplace operators are ready to collect Article 22 Income Tax on income received by domestic online merchants.

Bimo said the policy for collection of Article 22 Income Tax by marketplace operators has been deferred until 31 October 2026. Once that deferral period ends, he is confident that marketplace operators will be ready to implement the policy under MoF Reg. 37/2025.

"They are actually already ready, but there is a deferral until 31 October. After that, God willing, we will promptly activate the regulation and they are ready for implementation," he said. (DDTCNews)

MUI Again Calls for Zakat to Become a Tax Credit

The Indonesian Ulema Council (Majelis Ulama Indonesia/MUI in Indonesian) has once again urged the government to integrate zakat into tax policy by making it a tax credit. The call was made by Cholil Nafis, Chairperson of the Board of Trustees of the MUI National Sharia Council (Dewan Syariah Nasional/DSN in Indonesian), following the inauguration of Suahasil as the new minister of finance.

According to him, making zakat a tax credit would provide a dual incentive to the public, namely encouragement to fulfil religious obligations as well as obligations as citizens. At present, MoF Reg. 114/2025 provides that zakat or compulsory religious donations may be deducted from gross income provided that certain requirements are satisfied.

"We hope that zakat will be made a tax credit, thus, people paying zakat have both a religious motivation and a civic motivation," he said. (DDTCNews)