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Fiscal Benefits 2025

Tax Incentives & Fiscal Benefits for Foreign Investors in Indonesia

Indonesia offers world-class tax incentives including tax holidays up to 20 years, tax allowances with 30% investment deduction, import duty exemptions, and super deductions up to 300% for R&D. Maximize your ROI by leveraging Indonesia's competitive fiscal benefits for foreign direct investment.

20

Years Tax Holiday

300%

Super Deduction R&D

0%

Import Duty (eligible)

30%

Investment Deduction
Premier Incentive

Tax Holiday: 5-20 Years Corporate Income Tax Reduction

The most attractive fiscal incentive for large-scale foreign investment

Tax Holiday Benefits

Investment Value Tax Reduction Duration
IDR 100B - 500B
($6.5M - $32M)		 50% 5 years
IDR 500B - 1T
($32M - $65M)		 75% 7 years
IDR 1T - 5T
($65M - $325M)		 100% 10 years
> IDR 5T - 15T
($325M - $975M)		 100% 15 years
> IDR 15T
(>$975M)		 100% 20 years
Post-Holiday: Additional 50% reduction for 2 years after tax holiday period

Eligibility & Requirements

Qualifying Sectors (Pioneer Industries):
Technology & Digital
Manufacturing
Renewable Energy
Telecommunications
Petrochemicals
Pharmaceuticals
Key Requirements:
  • Minimum IDR 100 billion (~$6.5M) new investment
  • Pioneer industry classification per Minister of Finance regulation
  • New PT PMA establishment (not acquisition/merger)
  • Broad economic linkages and positive externalities
  • Technology adoption and innovation
  • Application within 1 year of commercial operation

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Alternative Incentive

Tax Allowance: Multi-Benefit Fiscal Package

Comprehensive tax benefits for qualifying investments

Investment Deduction

30% of investment value deducted from taxable income over 6 years (5% annually)

Example: IDR 10B investment = IDR 3B total deduction

Accelerated Depreciation

Faster asset depreciation rates reducing annual tax burden

Example: Buildings, machinery depreciated in shorter period

Extended Loss Carry-Forward

Losses can offset future profits for 5-10 years (vs standard 5)

Example: Year 1-3 losses offset Year 4-10 profits

Reduced WHT on Dividends

Lower withholding tax on dividends to foreign shareholders (10% vs 20%)

Example: 50% reduction in dividend tax
Tax Holiday vs Tax Allowance

Companies can choose either Tax Holiday OR Tax Allowance, not both. Tax Holiday suits mega-projects with delayed profitability. Tax Allowance better for smaller investments with quicker profits. Our financial consultants help optimize your tax structure.

Import Duty Exemptions

Zero Import Duties on Capital Goods & Equipment

Eligible Items:
  • Machinery and production equipment
  • Spare parts and components
  • Raw materials for production
  • Goods for infrastructure projects
Conditions:
  • Not manufactured domestically
  • Used for production purposes
  • Registered in Master List approval
  • Cannot be resold domestically

Super Deduction (Up to 300%)

Enhanced Tax Deductions for Strategic Activities

R&D Activities - 300% Deduction

Research and development expenses deducted at 300% of actual cost

Example: IDR 1B R&D spend = IDR 3B tax deduction
Vocational Training - 200% Deduction

Employee training and skill development costs at 200%

Example: IDR 500M training = IDR 1B deduction
Eligible Companies:
Location-Based Benefits

Special Economic Zone Tax Incentives

Additional fiscal benefits in designated investment areas

SEZ Tax Benefits
  • Income Tax Holiday

    10-25 years depending on investment value and sector

  • Import Duty Free

    Machinery, equipment, raw materials entering SEZ

  • VAT/Sales Tax Exemption

    Goods and services within SEZ exempt from VAT

  • Excise Exemption

    Excise-free for certain products in SEZ

Explore 15 SEZs in Indonesia
Regional & Industrial Estate Benefits
  • Industrial Estate Tax Reduction

    Land and building tax reductions up to 100% for qualifying estates

  • Pioneer Region Incentives

    Eastern Indonesia investments receive additional 10-20% tax relief

  • Export-Oriented Incentives

    Additional benefits for companies exporting 30%+ of production

  • Local Infrastructure Support

    Regional governments may provide additional land, utilities subsidies

How to Apply for Tax Incentives

Step-by-step process to secure fiscal benefits

1
Eligibility Assessment

Verify your investment qualifies - sector, value, structure. Our consultants assess eligibility.

2
Application Preparation

Prepare business plan, investment timeline, employment projections, technology transfer plans per regulation requirements.

3
Submission & Approval

Submit application to BKPM/Ministry of Finance. Decision within 5-10 working days with complete documentation.

We handle the entire process

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Novitasari
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Nafa Dwi Arini
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Tax Incentives Comparison

Incentive Type Benefit Duration Min. Investment Best For
Tax Holiday 50-100% income tax reduction 5-20 years IDR 100B+ Large pioneer industries
Tax Allowance 30% investment deduction + benefits 6+ years IDR 1B+ Manufacturing, export-oriented
SEZ Incentives 10-25 year tax holiday + import free 10-25 years Varies by SEZ Location-specific investments
Super Deduction 200-300% deduction Ongoing Any R&D, training programs
Import Duty Free 0% import duties Project duration Any Capital-intensive projects

Explore Related Regulations

Investment Law
Negative Investment List
Special Economic Zones

Maximize Your Investment Returns with Tax Incentives

Expert tax planning and incentive application support for foreign investors

Optimize your tax structure

consultant gaivo.co.id
Novitasari
Consult on WhatsApp
consultant gaivo.co.id
Nafa Dwi Arini
Consult on WhatsApp