Tax Incentives for Strategic Investors Extended

The Government, through the Investment Coordinating Board (Badan Koordinasi Penanaman Modal – “BKPM”), is currently preparing a revision to Regulation of the Minister of Investment and Downstream Industry amending BKPM Regulation No. 7 of 2020 (“PerBKPM 7/2020”) concerning the Details of Business Sectors and Types of Pioneer Industry Productions and the Procedures for Granting Corporate Income Tax (Pajak Penghasilan – “PPh”) Reduction Facilities. The regulation governs the provision of Tax Holiday incentives for investors through the Online Single Submission (“OSS”) system.

“We are in the process of drafting amendments to PerBKPM 7/2020 concerning the Tax Holiday, which expired in December 2025,” stated Riyatno, Deputy for Investment Climate Development at the Ministry of Investment and Downstream Industry, to Hukumonline.

Under this policy, corporate taxpayers may potentially obtain a 100% PPh reduction, depending on the amount and sector of investment. To date, there are 18 pioneer industries eligible to utilize the Tax Holiday facility as stipulated under Regulation of the Minister of Finance (“Permenkeu”) No. 130/PMK.010/2020 on the Granting of Corporate Income Tax Reduction Facilities, as amended by Permenkeu No. 69 of 2024 (collectively referred to as “Permenkeu 130/2020”), which has been further elaborated into 185 Indonesian Standard Industrial Classification (“KBLI”) codes.

“The target is to complete it this year as part of the extension of the Tax Holiday facility under the Ministry of Finance’s regulatory planning program (Progsun),” he added.