Franky Sibarani, the BKPM chief, said on Friday that the regulation sets out a mechanism for requesting a tax holiday, a postponement of duties to pay tax for a certain period.
He said in a statement that companies could expect the government to issue a decision either to grant or reject such a request within 65 days. The BKPM will coordinate with the Finance Ministry, which is the authority in such matters.
Lestari Indah, a deputy to the head of the agency, said companies that felt they met the criteria for a tax holiday, as set out in a Finance Ministry regulation issued earlier this year, could obtain a request form from the BKPM's one-stop investment service.
This request then is taken to a discussion involving officials from the Finance Ministry, the BKPM, industry representatives and other consultants.
“The meeting will decide whether to approve or reject the request,” Lestari said.
Companies that are refused a tax holiday may still be eligible for other taxation incentives from the government, including a reduction in corporate income tax and other incentives.
Under the Finance Ministry regulation, companies that may apply for a tax holiday are those in the so-called pioneering industries of upstream metal processing, refining, and organic chemical industry sourcing from oil and gas; industrial machinery; agricultural manufacturing; forestry and fishery; information, communication and technology; and shipping.
The company must also commit investment of Rp 1 trillion ($69.7 million), or half that amount if setting up a business in IT and communications that brings high technology into the country.
“We believe that the new regulation regarding tax holidays can help boost the competitiveness of the investment [climate] in Indonesia,” Lestari said.