Executive Summary

Key insights and market outlook

The Indonesian government has announced significant tax incentives for 2026, including full coverage of Personal Income Tax (PPh 21) for workers earning up to Rp10 million monthly and 100% VAT exemption on homes priced up to Rp2 billion. These measures, outlined in two new regulations (PMK No. 105/2025 and PMK No. 90/2025), aim to boost consumer spending and support economic growth through fiscal stimulus.

Full Analysis

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Deep Dive Analysis

Indonesian Government Launches Comprehensive Tax Incentives for 2026

Economic Stimulus Package Details

The Indonesian government has introduced a comprehensive economic stimulus package for 2026, featuring significant tax incentives aimed at boosting consumer spending and supporting economic growth. The measures are outlined in two key regulations: PMK No. 105/2025 covering personal income tax relief and PMK No. 90/2025 addressing VAT exemptions on property purchases ¹

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Personal Income Tax Relief

Under PMK No. 105/2025, workers earning up to Rp10 million monthly will be exempt from Personal Income Tax (PPh 21) throughout 2026. This relief targets employees in specific industries including footwear, textiles, furniture, leather goods, and tourism ¹

². The government will directly cover the tax amount, although employers will still administratively withhold the tax ⁵.

Property Tax Incentives

The government is continuing its 100% VAT coverage policy for housing purchases through PMK No. 90/2025. This applies to homes priced up to Rp2 billion for properties valued up to Rp5 billion. The measure aims to maintain momentum in the property sector and support economic growth ⁴

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Implementation and Impact

Both policies will be effective throughout 2026, covering the period from January to December. The government emphasizes that these measures are crucial for maintaining consumer purchasing power and ensuring economic stability ¹

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References