Government Extends Tax Holiday Facility Until End Of 2025

Thursday, 14 Nov 2024

By ferry@insightinnews.com The Minister of Finance has officially extended the tax holiday facility until December 31, 2025, through Regulation of the Minister of Finance (PMK) Number 69 of 2024, which amends PMK No. 130/PMK.010/2020. This decision aims to attract more foreign investment to Indonesia amid the implementation of a global minimum tax of 15 percent by various countries. The extension of the tax holiday was announced by the Minister of Investment and Downstream Industry, as well as the Head of the Investment Coordinating Board (BKPM), Rosan Roeslani, following a coordination meeting with the Coordinating Ministry for Economic Affairs in Jakarta on Sunday, November 3, 2024. Rosan emphasized the significance of the tax holiday in facilitating substantial foreign investment inflows into Indonesia. "The tax holiday plays a crucial role and constitutes a significant portion of incoming investments, exceeding 25 percent. Furthermore, the introduction of the Global Minimum Tax (GMT) at a rate of 15 percent in many countries has also influenced this extension," stated Rosan. He further explained that over 100 countries have adopted the global minimum tax of 15 percent. If Indonesia does not impose this tax on foreign companies, the home country of those companies will do so. This situation necessitates that Indonesia adjust its tax incentive policies to remain competitive in the eyes of foreign investors. The BKPM has conducted outreach to potential foreign investors regarding the global minimum tax policy. Nevertheless, Rosan has assured that the Indonesian government has prepared alternative incentives to maintain the interest of foreign investors. "We have made adjustments so that this 15 percent tax holiday can be compensated with other forms of incentives," he explained. Rosan further noted that the global minimum tax policy applies solely to foreign companies. Domestic firms can still apply for an extended tax holiday incentive, which has been prolonged until the end of 2025. This policy is expected to stimulate both domestic and foreign investment across various economic sectors. With the extension of the tax holiday, the Indonesian government is optimistic about attracting more foreign investment while also supporting efforts to create jobs, foster economic growth, and ensure business sustainability amid an increasingly competitive global economic landscape.

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