IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 15 Aug 2011 | Removal date: open ended
Still in force

Tax or social insurance relief

On 15 August 2011, the Indonesian Ministry of Finance issued regulation 130/PMK.011/2011 introducing tax holidays for companies in "pioneering industries".
With the regulation, certain companies may obtain income tax exemptions within the first five to years after the start of commercial production (art. 2(2) of the regulation). After the end of this tax exemption, the entities are eligible for another two years to obtain a income tax reduction of 50%. However, according to art. 2(4), the period of tax exemptions and reductions may be extended "taking into account the interests of maintaining the competitiveness of national industries and the strategic value of certain business activities".
The criteria for being awarded tax holidays are as follows:

  • "a. being part of a pioneering industry;
  • b. have new capital investment plans that have been approved by a competent agency worth more than 1 trillion IDR 'based on the exchange rate on the day of the issuance ca. 117 million USD'
  • c. placing at least 10% of the funds of the capital investments referred to in letter b in Indonesian banks and not withdrawing them before the start of the realization of the investment
  • d. have the status of an Indonesian legal entity for at least 12 months on the day of the implementation of this regulation" (own translation; art. 3(1) of the regulation).

Furthermore, article 3(2) defines "pioneering industries" as one of the following:

  • "a. basic metals industry;
  • b. petroleum refining industry and/or basic organic chemical industry which is derived from petroleum and natural gas;
  • c. machine industry;
  • d. industry in the field of renewable resources; and/or
  • e. communications equipment industry".

The article also mentions that the scope of pioneering industries may be extended "taking into account the interests of maintaining the competitiveness of national industries and the strategic value of certain business activities".
The regulation came into force on the day of its issuance.
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.
 

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

120 Crude petroleum & natural gas
153 Sands, pebbles, gravel, natural bitumen & asphalt
282 Wearing apparel, except fur apparel
334 Petroleum gases & other gaseous hydrocarbons, except natural gas
341 Basic organic chemicals
342 Basic inorganic chemicals n.e.c.
343 Tanning or dyeing extracts; tannins; colouring matter n.e.c.
344 Activated natural mineral products incl. acids, oils and tar
345 Miscellaneous basic chemical products
346 Fertilizers & pesticides
347 Plastics in primary forms
348 Synthetic rubber & mixtures thereof in primary forms
352 Pharmaceutical products
354 Chemical products n.e.c.
369 Other plastics products
371 Glass & glass products
375 Articles of concrete, cement & plaster
379 Other non-metallic mineral products n.e.c.
382 Jewellery & related articles
411 Basic iron & steel
412 Products of iron or steel
413 Basic precious metals & metals clad with precious metals
414 Copper, nickel, aluminium, alumina, lead, zinc & tin, unwrought
415 Unfinished products of copper, nickel, aluminium, lead, zinc or tin
421 Structural metal products & parts
422 Tanks, reservoirs & containers of iron, steel or aluminium
429 Other fabricated metal products
431 Engines & turbines & parts
432 Pumps, compressors, hydraulic & pneumatic power engines; parts
433 Bearings, gears, gearing & driving elements; parts
434 Ovens & furnace burners & parts
435 Lifting & handling equipment & parts
439 Other general-purpose machinery & parts
441 Agricultural or forestry machinery & parts
442 Machine-tools & parts
443 Machinery for metallurgy & parts
444 Machinery for mining, quarrying & construction; parts
445 Machinery for food, beverage & tobacco processing; parts
446 Machinery for textile, apparel & leather production; parts
447 Weapons & ammunition & parts
448 Domestic appliances & parts
449 Other special-purpose machinery & parts
451 Office & accounting machinery and its accessories
452 Computing machinery & parts
461 Electric motors, generators & transformers; parts
462 Electricity distribution & control apparatus; parts
463 Insulated wire & cable; optical fibre cables
464 Accumulators, primary cells & primary batteries; parts
465 Electric filament or discharge lamps; lighting equipment; parts
469 Other electrical equipment & parts
471 Electronic valves & tubes; electronic components; parts
472 Television & radio transmitters; cameras; telephone sets
473 Broadcast recording apparatus; microphones, loudspeakers, etc.
474 Parts for the goods of classes 4721 to 4733 & 4822
475 Disks, tapes, storage devices & other media, not recorded
476 Disks, tapes & other physical media, recorded
479 Cards with magnetic strips or chip
481 Medical & surgical equipment & orthopaedic appliances
482 Instruments & control equipment, except optical instruments
483 Optical instruments & photographic equipment; parts thereof
491 Motor vehicles, trailers & semi-trailers; parts
492 Motor vehicle bodies; trailers & parts thereof
493 Ships
499 Other transport equipment & parts

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