Government says PFII in SEZ can offer layered fiscal incentives

The Coordinating Ministry for Economic Affairs has stated that the Indonesia International Financial Centre (PFII) will be integrated with Special Economic Zones (SEZ), allowing for the provision of layered fiscal incentives.

Susiwijono Moegiarso, Secretary to the Coordinating Ministry for Economic Affairs, explained to journalists in Jakarta on Monday that SEZs already possess a more regulatory-ready incentive framework. On the other hand, the PFII is a specialised programme for the financial sector that also possesses its own unique facilities.

If both are situated within the same zone, investors could potentially enjoy layered benefits, namely SEZ incentives combined with the specific advantages inherent to the PFII. “If the IFC is located there, it will automatically receive SEZ facilities plus the specific IFC advantages. This will make the offering even more comprehensive,” said Susiwijono.

He detailed that available SEZ facilities include both fiscal and non-fiscal incentives. Fiscal incentives consist of exemptions or deferrals of import duties, Value Added Tax (VAT), and Income Tax (PPh). Meanwhile, non-fiscal facilities include ease of importing and exporting goods, immigration facilitation, and reduced import restrictions.

Simultaneously, the government is preparing several fiscal incentives for the PFII, such as up to 100 per cent income tax exemptions for businesses and foreign workers. Consequently, placing the PFII within an SEZ is viewed as a way to create a more competitive combination of incentives compared to if the programme operated independently outside of such zones.

The government has not yet determined which specific zone will be selected. However, if the PFII is directed towards Bali, there are two SEZ options: the Sanur Health SEZ and the Kura-Kura Bali SEZ.

The government noted that the presence of the IFC within an SEZ will not cause any overlap; instead, the scheme is designed to be complementary. Previously, Finance Minister Purbaya Yudhi Sadewa stated that the government is preparing various facilities to attract investors to the Indonesia International Financial Centre (PFII). These facilities include ease in immigration, labour, residency, licensing, and taxation.