Financial Centre with Tax Incentives: Is Indonesia Heading Towards Becoming a Tax Haven?

JAKARTA – The plan to establish an international financial centre offering special tax incentives has the potential to turn Indonesia into a tax haven. This topic has become a focal point of national media discussion this Friday.

Coordinating Minister for Economic Affairs, Airlangga Hartarto, did not provide a direct explanation regarding the potential for Indonesia to become a tax haven. He merely stated that tax facilities in financial centres are commonly provided to attract investors, similar to the models seen in Singapore and Dubai, United Arab Emirates.

“Tax havens exist everywhere now; Dubai and Singapore also have tax havens,” he remarked.

Airlangga explained that the development of a financial centre aims to attract large-scale investment flows. According to him, Indonesia requires new breakthroughs to incentivise investors to commit capital to the country.

Learning from Singapore, he noted that the neighbouring nation can attract up to Rp5,000 trillion through its financial centre. Another example, the Dubai International Financial Centre, can attract approximately US$800 billion, or the equivalent of Rp14,300 trillion.

“Currently, with our traditional investment methods, we see about Rp2,200 trillion in investment per year. But compare that to Singapore, which can attract Rp5,000 trillion related to their financial centre,” Airlangga said.

He believes Indonesia’s investment potential across various sectors is immense. Consequently, building a financial centre is viewed as a vital strategy to ensure the success of the government’s investment agenda.

“We must be attractive and look at the global picture. Globally, financial centres are limited—only Singapore, Dubai, Hong Kong, and certain parts of the US,” Airlangga added.

Airlangga stated that the government is currently drafting a law-level legal framework to regulate the operation of the financial centre, as stipulated in Law 4/2026.

The specific law regarding the operation of Indonesia’s international financial centre must be formed no later than three months after the promulgation of Law 4/2026. Law 4/2026 was promulgated on 17 June 2026 and is effective from that date.

Indonesia’s financial centre will be managed by a special body named the Indonesia International Financial Centre Board. To support the establishment’s objectives, the government will implement special taxation provisions within the zone.

“In order to achieve the objectives of the Indonesia International Financial Centre… business activities within the Indonesia International Financial Centre will be subject to special tax treatment, as well as special tax facilities and other specific incentives,” reads Article 248A, paragraph (6) of Law 4/2026.

In addition to the financial centre topic, other news includes discussions on Income Tax Article 22 collection by marketplace providers, indications of tax violations by a Chinese steel company, and special debt instruments from Danantara.

The Chairman of the National Economic Council (DEN), Luhut Binsar Pandjaitan, stated that the establishment of a financial centre and the presence of family offices will increase investor confidence in Indonesia.

Luhut noted that the financial centre and family offices serve as instruments to create legal certainty in Indonesia. The confidence of investors to commit capital to Indonesia’s financial centre through family offices will also bolster confidence in the Indonesian economy as a whole.

“The proposal made one and a half years ago was for an international financial centre with family offices. My goal back then was to build our credibility regarding the law, because we are known for being inconsistent with the law,” Luhut said.

Director of Extension, Service, and Public Relations of the Directorate General of Taxes (DJP), Inge Diana Rismawanti, emphasised that online traders on marketplaces can be exempt from Income Tax Article 22 collection if their annual turnover does not exceed Rp500 million.

To obtain this incentive, individual taxpayers owning the merchant account must submit a statement letter confirming their turnover is below the threshold. Regarding the submission of this statement, she reminded merchants to be honest about their turnover values.

“Every seller is expected to be honest; if their turnover is indeed below Rp500 million, they must inform their platform: ‘My turnover is still below Rp500 million, so you do not need to deduct tax from the income I receive’,” she said.

Minister of Finance Purbaya Yudhi Sadewa conducted a sudden inspection (sidak) at a Chinese steel company operating in the Pulogadung area due to allegations of non-compliance with applicable tax regulations.

Purbaya stated the inspection was conducted because there were indications of discrepancies between the scale of business activities and the reported tax obligations. Furthermore, there are suspicions that the tax paid by the company does not reflect the magnitude of its business operations.

“We have requested the company to present relevant documents so that the entire process can be conducted transparently and based on facts. This way, we can see fairly how the business practices are being conducted,” he said in an official statement.

Coordinating Minister for Economic Affairs Airlangga Hartarto stated that the purchase of special debt instruments issued by Danantara, such as ‘Patriot Bonds’ and ‘Merah Putih Bonds’, does not constitute money laundering.

Airlangga argued that purchasing debt instruments or engaging in investment activities cannot be considered money laundering because investors are placing their funds into official instruments. He also assessed that this new policy does not damage global confidence in Indonesia as a member of the Financial Action Task Force (FATF), the organisation that combats money laundering regimes.

“As for the FATF, we are already a member. Naturally, if we have investments, it is not part of money laundering,” he concluded.