Indonesia Extends Tax Holiday to 2025: Key Benefits for Investors

To attract more foreign investment into Indonesia’s expanding market, the Ministry of Finance has officially extended tax holiday regulations for foreign enterprises until December 31, 2025.?

This extension is crucial in sustaining significant investment inflows, as tax holidays account for over 25% of total investment. Additionally, the mandatory 15% Global Minimum Tax (GMT) is a key factor influencing the implementation of these tax holidays in Indonesia.

The Benefits of Tax Holiday in Indonesia

A tax holiday is a fiscal incentive provided by the Indonesian government to attract foreign investment by offering reductions or exemptions on corporate income tax for a specific period. For qualifying investors, it provides up to 100% relief on Corporate Income Tax (CIT) for periods ranging from 5 to 20 years.

This incentive targets foreign companies in specific categories, such as Special Economic Zones (SEZs), pioneer industries, and IKN investors. Key benefits of tax holiday incentives include:?

• Reduced Tax Burden: Up to 20 years of corporate tax exemption, significantly boosting cash flow.

• Lower Operational Costs: Reduced taxes free up funds for expansion, hiring, and growth initiatives.

• Encourages Long-term Investment: Extended tax holidays promote company stability and long-term growth in Indonesia.

• Supports Innovation: Savings can be redirected to R&D, infrastructure, and technology, enhancing competitiveness.

Guide to start investing in Indonesia

Indonesia presents abundant investment opportunities through its dynamic business environment, driven by consistent economic growth and attractive incentives, including the tax holiday program. These factors continue to draw increasing foreign investment into the region.

At InCorp Indonesia, our seasoned experts provide in-depth insights and high-quality support to help you successfully enter and thrive in Indonesia’s market. Contact us today to unlock the promising potential of investing in Indonesia.?