Finance Ministry: 0% Tax Incentive for PFII to be Regulated via Government Regulation

Jakarta (ANTARA) - The Ministry of Finance has stated that the criteria for financial services to receive a 0% tax incentive for the Indonesia International Financial Centre (PFII) will be regulated in a Government Regulation (PP).

Director General of Financial Sector Stability and Development at the Ministry of Finance, Herman Saheruddin, explained that financial services must meet certain criteria to obtain the Income Tax (PPh) incentive. He emphasized that the most important requirement is that the financial service must bring foreign investment into the PFII.

“But do not misunderstand. The 0% PPh does not mean paying nothing at all, because it will be subject to the Global Minimum Tax,” Herman said.

On Wednesday (15/7), the Chair of Commission XI of the Indonesian House of Representatives (DPR RI), Mukhamad Misbakhun, revealed that the government is proposing a 0% tax incentive for business actors in the PFII area, which could be valid for up to 50 years. He stated that the incentive for business actors is in the form of an Income Tax (PPh) incentive.

According to Misbakhun, this policy is expected to attract back Indonesian investors who have been placing special purpose vehicles (SPV) in various foreign jurisdictions. The PFII area is also expected to become an enclave with its own appeal for investors.

Furthermore, during the Working Committee Report Meeting and Decision Making on the PFII Bill at Commission XI of the DPR RI in Jakarta on Monday, Minister of Finance Purbaya Yudhi Sadewa conveyed that the PFII Bill includes the regulation of tax facilities and other special facilities to attract investment. Tax facilities include Income Tax (PPh) facilities, Value Added Tax (PPN) and/or Sales Tax on Luxury Goods (PPnBM) facilities, and customs facilities. Other special facilities include golden visas, immigration, employment, licensing, and residency.