President Cancels Income Tax for Investors in IKN

In an attempt to attract more Direct Domestic Investment (DDI) into Indonesia’s new capital of Nusantara (IKN), President Jokowi is cancelling mandatory income tax for those domestic entrepreneurs investing IDR 10-billion in infrastructure and the public services sector, report Tempo.

The new rule is contained in Government Regulation No. 12 of 2023 concerning licensing, ease of business, and investment facilities for businesses in IKN dated March 6, 2023.

“Reduction of corporate income tax as referred to in Article 28 paragraph (1) amounts to 100-percent of the corporate’s income tax owed,” as quoted from Article 29 paragraph 1 in a copy of the PP that Tempo received, on Thursday, March 9.

In the regulation, this tax-free programme will be applied to entrepreneurs whose investment has a strategic value to accelerate the new capital city project development which includes infrastructure and public services, economic recovery, and other business fields, say Tempo.

The infrastructure and public services stipulated in the PP include toll roads, airports, health facilities, people’s markets, and public transportation, while those related to economic recovery are the construction of shopping malls, star hotels, MICE (meetings, incentives, conventions, and exhibitions), and gas stations.

For the infrastructure sector, the tax exemption will be given for 30-years for investment made from 2023-2030; 25-years for investment made from 2033-2035, and 20-years for investment made from 2036-2045.

For the economic sector, tax exemption is given for 20-years for investment made from 2023-2030; 15-years for investment made from 2033-2035, and 10-years for investment made from 2036-2045.

Tempo are also reporting that President Jokowi is providing tax relief for investors in the agricultural cultivation and/ or urban fisheries sector, in added value industry and/ or industrial engineering, construction service, and real estate services up to 50-percent within a period of 10-years.

Source: Tempo

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