Tax Holiday Realization Deadline To Be Trimmed

Wednesday, 27 January 2021

Tax Holiday Realization Deadline To Be Trimmed

JAKARTA. The Indonesia Investment Coordinating Board (BKPM) will cut the period of investment realization that gets tax exemption facilities or tax holiday. 

Under the current regulation, the deadline for implementing the investment commitment for tax holiday is one year. This is as stated in the Minister of Finance Regulation (PMK) Number 130 / PMK.010 / 2020.

Quoting, in fact many investors do not realize their investment commitments in accordance with the fixed deadline.

To date, the value of approved investment commitments for tax holiday has reached IDR 1,000 trillion.
However, the investment, which was supposed to have a real economic impact, has stalled.

Without mentioning the change in the time period to be determined, BKPM assessed that the rule change would be formulated as a win-win solution to the problems faced by the government and investors.

For information, the tax holiday facility is an incentive in the form of a tax reduction of up to 100% for a maximum of 20 years, to companies whose business fields are included in the list of 18 pioneer industries.

Read: Minister of Finance Hands Over Tax Holiday Granting Authority to BKPM

However, the pioneer industry criteria do not strictly refer only to the 18 business fields determined. The companies that are not included in the list of business fields mentioned may receive tax reduction incentives as long as they meet the following conditions: (1) have widely interrelated business activities; (2) provide added value and high externalities, (3) introduce new technology;  and  (4) have a strategic value for the national economy.

Investment Increases by 3%

Meanwhile, Indonesia's investment realization in the fourth quarter of 2020 was recorded at IDR 214.7 trillion or grew 3% year on year (yoy).

Quoting, the realization value consists of Foreign Direct Investment (PMA) of IDR111.1 trillion or 51.7% of the total investment and Domestic Direct Investment of IDR 103.6 trillion.

BKPM believes that investment realization in the fourth quarter as being influenced by improving investor confidence in the Indonesian economy.

This is due to the presence of the Corona Virus Disease (Covid-19) vaccine and the enactment of Law Number 11 of 2020 on Job Creation.



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