Indonesia Extends Tax Holiday Incentive Period to Boost Investment

Government Extends Tax Incentive

The Indonesian Ministry of Finance has announced an extension of the tax holiday incentive program until December 2026. The current regulation, PMK No. 69/2024, only covers the tax holiday until December 2025, necessitating this extension. According to Dirjen Kemenkeu, Febrio Nathan Kacaribu, the new regulation is currently being processed to continue the incentive.

Alignment with Global Tax Standards

The upcoming regulation will also be adjusted to comply with the global minimum tax requirements as agreed upon by the Organisation for Economic Co-operation and Development (OECD). The global minimum tax rate is set at 15%, which means that the tax holiday incentive will no longer be a complete tax exemption as it was previously. This change reflects Indonesia's commitment to adhering to international tax standards while still providing attractive investment incentives.

Impact on Investment Climate

The extension of the tax holiday incentive is expected to maintain Indonesia's competitiveness in attracting foreign investment. By continuing this incentive, the government aims to support economic growth and development. The modification to align with the global minimum tax rate demonstrates a balanced approach between attracting investment and complying with international tax norms.