Regulation Update
Building Nusantara Capital City, Government Exempts Corporate Income Tax for Up to 30 Years

Monday, 13 March 2023

Building Nusantara Capital City, Government Exempts Corporate Income Tax for Up to 30 Years

The government exempts Income Tax or a tax holiday, for up to 30 years for companies investing in the Nusantara Capital City (IKN), with a minimum investment value of IDR 10 billion.

This is stated in Government Regulation (PP) Number 12 of 2023 concerning Granting Business Licensing, Ease of Doing Business, and Investment Facility for Business Actors in the Capital City of the Archipelago which was published on 6 March 2023.

The tax exemption is given to domestic companies that invest in three business fields, namely infrastructure and public services, economy, and other business fields.

Infrastructure Business Sector

In detail, the infrastructure development and public services referred to consist of:

a. Power generation including new and renewable energy;
b. Construction and operation of toll roads;
c. Construction and operation of seaports;
d. Airport construction and operation;
e. Development and provision of clean water;
f. Construction and operation of health facilities;
g. Construction and operation of education units;
h. Development and provision of telecommunications and informatics infrastructure;
i. Development and management of urban park forests;
j. Development of housing, residential areas, and offices;
k. Wastewater development and management;
l. Construction and management of underground utility network systems;
m.Construction and operation of industrial estates and    research and innovation centers (industrial and science parks);
n. Construction and operation of public markets;
o. Provision of public transportation;
p. Construction and operation of passenger or goods transport vehicle terminals; and
q. Construction and operation of stadiums/sports facilities.

Economic Generation Business Sector

Meanwhile, in the field of Economic Generation, business activities that receive a tax holiday include:

a. Construction and operation of shopping centers (malls);
b. Provision of tourist facilities and accommodation services/starred hotels;
c. Provision of Meeting, Incentive, Convention, and Exhibition (MICE) facilities; and
d. Refueling and/or charging stations for electric vehicles (battery charging).

Other Business Sectors

In addition, the government also determined seven other business fields that can get tax facilities, namely:

a. Urban farming and/or fishery cultivation;
b. value-added industry and/or industrial engineering
c. hardware and/or software industry;
d. trade services;
e. construction service;
f. real estate brokerage services; and
g. tourism services and creative economy

For the record, the business sector of trade services, construction, and real estate brokerage services that receive facilities, must be located and earn income at the IKN.

Term of Facility

Meanwhile, the period for the tax holiday given by the government for investment in the IKN varies, depending on the business sector and the time of investment realization.

Business Sectors

Realization in 2023-20230

Realization in  2031-2035

Realization in 2036-2045

Public infrastructure and services

30 years

25 years

20 years

Economic generation

20 years

15 years

10 years

Other business sectors

10 years

10 years (50% tax deduction)

Waiting for Technical Rules

However, to be able to use this tax holiday facility, companies must wait for the technical rules.

This is because this regulation has not yet regulated more technical matters, such as the criteria for companies entitled to the facility, submission procedures, decision-making mechanisms and other obligations. The more detailed provisions will be regulated in the Minister of Finance Regulation (PMK)


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