Encouraging National Entrepreneurs, Government Prepares Local Tax Incentives

President Joko Widodo ordered the regional governments to prepare regional taxes and retribution incentives for business actors, through Presidential Regulation (Perpres) Number 2 of 2022

The regulation, which regulates the national entrepreneurship development, is a guideline for Ministries/Institutions (K/L), regional governments, and other stakeholders in accelerating the growth and ratio of national entrepreneurship for the period of 2021 to 2024.

Several types of incentives that must be prepared by regional governments include reductions, relief or exemptions from regional taxes, and retribution adjusted to the fiscal capacity of each regional government.

Income Tax Facilities

In addition to ordering regional governments to provide tax facilities, the President also encourages the provision of income tax facilities. However, the provision of the income tax facilities must comply with the applicable laws and regulations.

Apart from having to provide tax incentives, regional governments are also instructed to provide assistance in the form of interest subsidies on government credit programs.

Ease of Doing Business

In the regulation promulgated on 3 January 2022, the President also asked the Regional Government, Ministries/Institutions (K/L) and other policymakers to facilitate the business actors.

These facilities include:

1. Electronically integrated licensing registration
2. Facilitation of domestic and export standardization and certification
3. Access to financing and assurance
4. Priority in the procurement of government goods and services
5. Prioritizing access to the digital market of State-Owned Enterprises.
6. Getting access to the supply of raw materials or auxiliary materials
7. Getting access to public facilities (commercial land, shopping areas, promotions on public infrastructure)
8. Doing research and business development
9. Receiving assistance, education, and training as well as technical guidance
10. Other facilities according to applicable regulations

Disaster Relief

In the rules, the government also accommodates the provision of assistance for business actors when there is a state of Force Majeure such as natural disasters, outbreaks or other conditions.

The assistances include credit restructuring, business reconstruction, capital assistance, and other assistance.

The various facilities and tax relief that will be provided are expected to strengthen the entrepreneurial ecosystem and encourage the growth of entrepreneurship that has added value based on technology.

In its implementation, this entrepreneurial development effort will be carried out by a committee consisting of directors and facilitators who are directly responsible to the President.