JAKARTA. The Indonesian government has introduced a tax incentive for authors by reducing the tax rate on book royalty income. Under the new policy, royalty income that was previously subject to progressive income tax rates will now be subject to a 1.5% Final Income Tax
The measure is part of the Second Semester 2026 Economic Stimulus Package announced by the government. Coordinating Minister for Economic Affairs Airlangga Hartarto said the incentive fulfills one of President Prabowo Subianto's campaign promises during the 2024 presidential election.
"We have decided to provide a tax incentive for authors by imposing a 1.5% Final Income Tax on royalty income," Airlangga said in Jakarta on Tuesday (May 26), as quoted by CNBCIndonesia.com.
According to the government, the policy is expected to give authors greater financial flexibility to produce new works without being burdened by higher tax rates.
From Progressive Tax to a Final Tax
Previously, authors' royalty income was subject to Indonesia's progressive income tax system, with rates increasing according to income brackets. Under the new policy, royalties will instead be taxed at a flat 1.5% Final Income Tax.
Minister of Finance Purbaya Yudhi Sadewa said the new rate is significantly lower than the tax burden previously borne by authors.
"The rate is reduced from 6% to a 1.5% final tax," Purbaya said, as quoted by CNBCIndonesia.com.
The government estimates that the policy will provide tax incentives worth approximately IDR 12.5 billion to IDR 31.2 billion, benefiting an estimated 16,600 to 41,500 authors.
Purbaya said the primary objective of the policy is not merely to reduce authors' tax burden, but also to encourage more people to write books, particularly academic and scientific publications.
He added that the lower tax rate is expected to boost authors' productivity and increase the number of published works.
To qualify for the incentive, books must have an International Standard Book Number (ISBN). The detailed provisions governing the incentive will be stipulated in a forthcoming Government Regulation (GR). (KEN)
