Government Ensures Tax Regime in PFII Will Comply with Global Standards

The Indonesian government has assured that the tax policy at the International Financial Centre Indonesia (PFII) will comply with tax regimes agreed upon at the global level. Director General of Financial Sector Stability and Development at the Ministry of Finance, Herman Saheruddin, stated that this provision includes compliance with the global minimum tax (GMT), as implemented in international financial centres in other countries. “The principle is that we must also comply with international standards. For instance, we cannot engage in a race to the bottom,” Herman said when met at the Parliament Complex in Jakarta on Wednesday (8/7/2026). “Therefore, we must still adhere to the global minimum tax,” he stressed.

However, Business Law expert and Professor of Commercial Law at Gadjah Mada University, Paripurna P. Sugarda, believes that the tax facility scheme is crucial in attracting investors compared to other global financial centres. “This will be very interesting because this provision concerns the competitiveness of the PFII compared to international financial centres in other countries,” Paripurna said during a hearing with Commission XI of the Indonesian House of Representatives on Monday (6/7/2026).

Comparing it to Dubai, which already has an established international financial centre, Paripurna noted that the tax regime in that global financial hub is closely linked to tax exemptions. He suggested that if Indonesia wants to establish the PFII and compete with Dubai, a 0% tax rate could be considered. “In Dubai, the Personal Income Tax is 0%, so we have to compete with them, where corporate tax starts from 0-9% depending on the threshold. If we want to compete, we must review the 0% clause,” Paripurna asserted.

He outlined a series of tax facilities that need to be regulated in the PFII Law, which are already included in the draft bill currently being discussed by the government and the House of Representatives. These facilities cover income tax, value-added tax (VAT), and luxury goods sales tax. For income tax, the proposed facilities include a 100% reduction in corporate income tax, income tax reductions for experts, exclusion as a domestic tax subject, and exemption from withholding or collection. For VAT and luxury goods sales tax, the facilities include VAT not being collected and luxury goods sales tax exemptions on the delivery of certain strategic taxable goods and/or services, as well as the import of certain strategic taxable goods.

Chairman of Commission XI of the House of Representatives, Mukhamad Misbakhun, also revealed that the government and parliament are discussing the implementation of a tax rate as low as 0% to enhance Indonesia’s competitiveness against other global financial centres. “From the taxation side, the planned concept is 0% to attract people from all over the world. Dubai is already at 0%, and several other financial centres in other countries are also at 0%, because later foreign nationals can establish a company in the PFII and then expand their investments both outside and within Indonesia,” Misbakhun said. According to him, this scheme will provide flexibility for global companies to use Indonesia as an operational base or regional investment hub.