Kemenkeu Drafting Technical Regulations on Investment Value Requirements to Obtain Tax Incentives under PFII

The Ministry of Finance (“Kemenkeu”) is currently preparing the technical and implementing regulations of Law on the Indonesian International Financial Center (“PFII Law”). One of the matters to be regulated concerns the minimum investment value required for investors to qualify for tax incentives for a period of 50 years.

“The amount is still being prepared and calculated. However, the specific details will later be stipulated in a Regulation of the Government (“PP”) or a Regulation of the Minister of Finance (“PMK”),” said Herman Saheruddin, Director General of Financial Sector Stability and Development (Stabilitas dan Pengembangan Sektor Keuangan – “SPSK”) at the Ministry of Finance.

Based on the draft Bill (“Draft Bill”) on the PFII obtained by Hukumonline, the granting of such facilities must remain subject to international agreements, including the implementation of the 15% global minimum tax, as stipulated under Article 51 paragraph (3). Accordingly, the effective exemption from income tax provided under the PFII framework would be below such threshold.