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Indonesia Economy News Southeast Asia Technology

Indonesia Issues Incentives for New Capital

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Indonesia has issued various incentives to attract investments into its new capital city, Nusantara. The incentives range from income tax holidays to import tax exemptions as well as the permission to hire foreign workers for up to 10 years.

Nusantara is estimated to cost 35 billion US dollars to construct, and the central government is expected to begin operations in the new city in 2024. Public funds would only be used for 20% of the project with the remainder coming from foreign investors. The government is expecting the presidential palace to be finished in time for the country’s Independence Day anniversary on 17 August.

The new capital sits on a 632,000-acre site, which is roughly four times the size of the current capital, Jakarta. The project presents ample opportunities for foreign investors in a variety of sectors ranging from infrastructure to manufacturing to healthcare and education.

The government will provide income tax holidays and reductions for investments in Indonesia’s new capital city. Further, the government will issue future implementing regulations on how the tax facilities will be regulated.

The government will provide up to 100% corporate income tax exemption of between 10 and 30 years for domestic taxpayers that invest at least 10 billion rupiahs (about 650,000 US dollars) in the new capital. The duration of the incentive depends on the sectors in which the investment is directed.

For instance, investing in public services will receive the most extended tax holiday up until 2035. Banks and insurers that invest before 2035 can enjoy up to 25 years of income tax exemption whereas those that invest before 2045 can receive up to 20 years.

Developers of other critical infrastructure, such as public works, airports, seaports, and housing, can also benefit from the incentives, as well as businesses that engage in economic development through the construction of hotels, malls, energy infrastructure, and software.

Corporate income tax reductions will be available for investors that develop financial centers in the new capital, as well as for companies that relocate their head offices to the new capital. Moreover, investors that implement certain research and development activities will be afforded a reduction in their gross income.

Certain micro, small, and medium-sized enterprises will also pay a zero percent corporate income tax rate.

Read the original article HERE.

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