In a recent development, the Indonesian government has introduced several tax incentives for investors in the new capital city, Ibu Kota Nusantara (IKN). Among these incentives is a tax holiday, offering exemption from taxes for a specific period.
According to Dwi Astuti, Director of Public Outreach, Services, and Public Relations at the Directorate General of Taxes, the tax holiday will be granted to investors who invest a minimum of Rp 10 billion in IKN. The maximum duration for this tax relief is 30 years.
“This tax holiday is applicable for investments of Rp 10 billion or more for a maximum period of 30 years,” stated Dwi in a press release on Monday (11/4/2023).
The tax incentives are targeted towards specific sectors that meet the eligibility criteria, tailored to the needs of IKN’s development. These sectors include infrastructure and public services, economic growth sectors, and various other business fields.
Detailed regulations regarding the tax holiday are outlined in Government Regulation No. 12 of 2023 concerning Business Licensing, Ease of Doing Business, and Investment Facilities for Business Actors in the New Capital City.
For instance, infrastructure and public service sectors encompass projects such as power plants, toll roads, airports, healthcare facilities, among others. Meanwhile, economic growth sectors eligible for tax holiday include shopping malls, tourism facilities, accommodation services, meeting facilities, and electric vehicle charging stations.
Additionally, urban agriculture and fisheries, value-added industries, hardware and software industries, trading services, and others fall under the category of other business fields eligible for tax holiday.
Furthermore, the regulation specifies that the reduction in corporate income tax, as outlined in Article 28, amounts to 100% of the owed corporate income tax.
The duration of tax reduction varies depending on the sector and the period of investment. For instance, infrastructure and public service sectors can benefit from tax reduction for up to 30 years for investments made between 2023 and 2045. Similarly, economic growth sectors and other business fields have varying durations of tax reduction based on the investment period.
However, it’s important to note that the government has provisions for revoking the tax holiday if investors fail to meet certain requirements, such as the delayed realization of investment within two years after approval.
These tax incentives aim to attract investors to IKN and support its development as the new capital city, offering long-term benefits for both investors and the nation’s economic growth.
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