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Get to Know, The Abundant Tax Facilities for SWF

Thursday, 28 January 2021

Get to Know, The Abundant Tax Facilities for SWF

JAKARTA. The government is currently drafting tax provisions for the Investment Management Institution (LPI) known as the Sovereign Wealth Fund (SWF) or it is called Nusantara Investment Authority (NIA).

In addition to securing its tax status, the draft bill in the form of Government Regulation (RPP) also offers abundant tax facilities for SWF and the entities it cooperates with.

For information, LPI or SWF is an institution established for the purpose of increasing and optimizing long-term asset value.

Therefore, LPI is authorized to carry out investments, either directly or indirectly, or to cooperate with third parties through the establishment of special entities. 

There are at least four facilities listed in the Top draft, the copies are available for download on  uu-ciptakerja.go.id page.

First, the cost of obtaining, collecting, and maintaining income including the establishment of a mandatory reserve fund, can be a reduction in gross income.

The facility is provided until LPI's mandatory reserve fund reaches 50% of the capital or up to dividend distribution, depending on which comes first.

Read: Understanding the Mechanism of Making Unification of Periodic Income Tax Return

Second, interest on loans obtained by LPI will not be subject to Income Tax (PPh), except those derived from bonds.

Third, dividends received by third parties as Resident Tax Subjects (SPDN) from entities jointly formed with LPI are exempted from tax object.

Whereas, dividends received by third parties with status as Non-Resident Tax Subjects (SPLN) who cooperate directly with LPI are subject to 0% final income tax.

Fourth, the profit received by a third party on the sale or transfer of shares in a company formed with LPI is subject to a final income tax of 0.1%, if it is conducted outside the stock exchange.

Meanwhile, if the sales transaction is carried out through the stock exchange, the rates follow the provisions stipulated in the Income Tax Law.

Supervisory Board Appointed

Citing bisnis.com, the provision of various facilities is intended to encourage LPI to grow until the value of assets it manages continues to increase.

This is reflected in the facility in the form of expense recognition for the establishment of a mandatory reserve fund up to the value of up to 50% of the initial capital

Furthermore, according to the government, this incentive scheme was given at the beginning of its formation, but if the LPI has produced or has a new investment project, it will be taxed.

To support SWF activities, President Joko Widodo has appointed five people as a supervisory board on Wednesday (27/1), led by Minister of Finance Sri Mulyani Indrawati as a chairman. 

The following is the composition of the supervisory board appointed through Presidential Decree (Keppres) No. 6/P/2021. The five persons are: 

  • Minister of Finance Sri Mulyani Indrawati as Chairman, concurrently  member
  • Minister of State-Owned Enterprises (BUMN) Erick Thohir as member
  • Darwin Cyril Noerhadi as member
  • Yozua Makes as member
  • Hariyanto as member


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