Indonesia Plans 0% Income Tax for 50 Years at New Financial Center
Updated
Updated · news.ddtc.co.id · Jul 16
Indonesia Plans 0% Income Tax for 50 Years at New Financial Center
1 articles · Updated · news.ddtc.co.id · Jul 16
Summary
A proposed Indonesia International Financial Centre law would let businesses in the zone pay 0% income tax for up to 50 years, according to House Commission XI chair Mukhamad Misbakhun.
The government is pairing the tax holiday with easier foreign-currency use, foreign-language financial statements and simpler business setup to lure major investors, banks, securities firms and investment companies.
Misbakhun said the package is meant to draw capital back from offshore hubs such as the British Virgin Islands, the Cayman Islands and Labuan into Indonesia.
The incentive is still under deliberation as the government and parliament review the IIFC draft law and its issue list, so the 50-year tax break has not been finalized.
Economists warn a 100% corporate tax holiday could erode Indonesia's domestic tax base if companies shift profits into the IIFC through holding structures, SPVs, royalties, interest and other intra-group transactions.
With a 15% global minimum tax, is Indonesia's 0% incentive for its new financial hub already obsolete for large multinationals?
Can Indonesia's tax-free financial hub attract foreign capital without draining its own domestic tax base through profit shifting?
Indonesia’s Bali IFC Ambition: Zero-Tax Zone, Global Talent, and the Race to Join the World’s Top Financial Hubs by 2026
Overview
Indonesia is taking bold steps to become a leading financial powerhouse in the region through the proposed Indonesia International Financial Center (IIFC) initiative. The IIFC is designed as a comprehensive hub to foster growth in financial services, drive fintech development, and provide essential support services. Guided by principles of efficiency, transparency, and integrity, the IIFC aims to create a trustworthy environment for financial innovation and investment. This strategic move by the Indonesian government positions the IIFC as a cornerstone in its broader efforts to diversify the economy and strengthen its global financial standing.