Indonesia finalizes fiscal incentives for investments below Rp 500b

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Indonesia finalizes fiscal incentives for investments below Rp 500b

The government is finalizing a regulation on fiscal incentives for new investments below Rp 500 billion (US$35.49 million), which are not covered in the latest tax-holiday scheme.

Under the regulation being prepared, fresh investments worth between Rp 100 billion and Rp 500 billion will be eligible for a 50 percent cut in corporation tax for five years, said Investment Coordinating Board (BKPM) deputy director Azhar Lubis.

“The new incentives will be applied for pioneering industries that do not meet the Rp 500 billion requirement [for obtaining a tax holiday],” he said in Jakarta on Wednesday

The industries eligible for the incentives will be the same industries stipulated in Finance Ministry Regulation (PMK) No. 35/2018 on tax holidays, which include pharmaceutical raw materials, petrochemicals and semiconductors, as well as electrical parts and manufacturing.

The latest incentive is among several that the government is preparing to attract more investments to South East Asia’s largest economy.

The government is also expected to finalize new tax allowances and other tax incentives for small and medium enterprises (SMEs).

Finance Minister Sri Mulyani Indrawati said previously that fiscal incentives had an important role in maintaining the country’s economic growth amid external pressures on Indonesia’s economy, which are likely to force Bank Indonesia to increase its benchmark seven-day reverse repo rate during its board of governors meeting on Thursday.

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