Indonesia government is preparing to provide substantial tax incentives for foreign professionals working in the Indonesian International Financial Center.
Through the draft Indonesian International Financial Center Law, foreign professionals in the financial services sector are proposed to enjoy an Income Tax reduction of up to 100%.
This policy is part of a fiscal incentive scheme designed to increase Indonesia financial center’s competitiveness as an international financial center while attracting global talent and investment.
The Draft Indonesian International Financial Center Bill regulates not only Income Tax facilities, but also Value Added Tax, Luxury Goods Sales Tax, and even Import Duty exemptions.
Chapter V of the draft bill states that all business activities in the Indonesian International Financial Center will receive tax facilities and other special incentives.
Key Tax Incentives Offered :
▪️ Income Tax
– Corporate Income Tax reduction up to 100 percent for businesses in the financial sector, supporting financial services, and non‑financial sectors.
– 100 percent Income Tax reduction for foreign experts working in the financial services sector.
– Exemption from domestic tax subject status for foreign nationals holding a golden visa during its validity period.
– Exemption from withholding or collection of Income Tax on investment income in the Indonesian International Financial Center received by foreign taxpayers.
▪️ Value Added Tax
– Exemption from Value Added Tax on the delivery or import of certain strategic taxable goods (such as new housing, offices, shopping centers, warehouses) and services (such as rentals, construction of roads, bridges, power plants, telecommunications networks, hospitals, schools, government buildings, terminals, and other infrastructure).
– Exemption also applies to imports of capital goods needed for the development of the Indonesian International Financial Center.
▪️ Luxury Goods Sales Tax : Exemption from Luxury Goods Sales Tax on the transfer of luxury housing units to individuals, corporations, or government institutions operating in the Indonesian International Financial Center.
▪️ Import Duty : Exemption from Import Duty for capital goods required in the construction and expansion of the Indonesian International Financial Center.
Indonesia Finance Minister, Purbaya Yudhi Sadewa, recently indicated that the upcoming Indonesian International Financial Center will likely adopt a multi-location model rather than being centralized in a single hub.
According to the Minister Purbaya, the financial center could potentially span two or three different regions, with Bali emerging as the primary candidate. When questioned about the possibility of establishing the center in the new capital, Ibu Kota Nusantara (IKN), Purbaya remained skeptical, noting that IKN’s current low activity levels make it an unlikely choice for the project at this stage.
