ANNOUNCEMENT 15 Aug 2011In August 2011, the government of Indonesia announced a targeted tax change.
NUMBER OF INTERVENTIONS
Ministry of Finance regulation 130/PMK.011/2011 (in Bahasa Indonesia):
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:
Furthermore, article 3(2) defines "pioneering industries" as one of the following:
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.