JAKARTA. The Indonesian government and the House of Representatives (DPR) are currently deliberating the Draft Law on Indonesia’s International Financial Center (International Financial Center Bill/IFC Bill). The bill will serve as the legal basis for establishing Indonesia’s International Financial Center (IFC), commonly referred to as a financial center, as a modern, competitive, and internationally recognized financial ecosystem.
During a Public Hearing (Rapat Dengar Pendapat Umum/RDPU) held by the House Commission XI on Monday (July 6, 2026), lawmakers discussed a series of tax incentives that would be made available within the proposed financial center.
Under Article 33 of the IFC Bill, the proposed special tax treatment includes Corporate Income Tax (CIT) incentives, Value Added Tax (VAT) and/or Sales Tax on Luxury Goods (STLG) incentives, as well as customs facilities.
Corporate Income Tax Incentives
Pursuant to Article 36 of the IFC Bill, eligible businesses conducting financial sector activities within the IFC will be entitled to a 100% Corporate Income Tax reduction.
The same 100% Corporate Income Tax reduction will also be available to businesses providing supporting services to the financial sector, as well as businesses operating in non-financial sectors within the IFC.
In addition, foreign experts employed by financial sector businesses in the IFC will receive a 100% reduction in Individual Income Tax from the commencement of their employment within the financial center.
The bill also provides that foreign nationals holding an Indonesian golden visa issued under the IFC framework will be exempt from being treated as Indonesian tax residents for as long as their golden visa remains valid.
Furthermore, under Article 39, income derived by foreign taxpayers from investments made within the IFC will be exempt from Income Tax withholding and/or collection.
VAT Incentives
The IFC Bill also introduces VAT and Luxury Goods Sales Tax (LGST) incentives in the form of VAT not collected and LGST exemptions.
Under Article 42, the VAT facility applies to the supply of certain strategic taxable goods and/or taxable services, as well as the importation of certain strategic taxable goods.
Strategic taxable goods include newly constructed residential houses, apartment units, office buildings, retail premises/shopping centers, and warehouses supplied to eligible individuals, entities, or government ministries. The category also covers other strategic goods required for the development of the IFC.
Meanwhile, strategic taxable services include leasing services for residential houses, apartment units, office buildings, retail premises/shopping centers, and warehouses provided to individuals, entities, or institutions conducting business, carrying out official duties, or domiciled within the IFC.
The incentives also extend to construction services for infrastructure projects within the IFC, including roads, bridges, renewable energy power plants, drinking water supply systems, telecommunications networks, energy and water distribution networks, waste and wastewater treatment facilities, hospitals and clinics, medical laboratories, schools, universities, government buildings, residential housing, apartment buildings, office buildings, retail premises, warehouses, terminals, and similar infrastructure.
VAT incentives are likewise available for other strategic taxable services necessary for the development of the IFC.
In addition, VAT relief applies to the importation of capital goods required for the construction and development of the financial center.
The bill also exempts the transfer of luxury residential properties to eligible individuals, entities, and government institutions operating or located within the IFC from Luxury Goods Sales Tax (LGST). It further exempts the sale of very luxurious goods from Income Tax.
Customs Incentives
The IFC Bill also introduces customs incentives for businesses operating within the financial center.
These incentives take the form of import duty exemptions on imported goods and materials required for the construction and development of the IFC.
Other Special Facilities
Article 45 of the IFC Bill provides additional incentives within the financial center, including facilities related to immigration, employment, licensing, residency, golden visas, residence permits, and other supporting measures.
These facilities will be available to businesses, employees, experts, and other parties working within the IFC.
IFC Aims to Attract Investment
The government expects that the establishment of the International Financial Center, together with its extensive tax incentives, will encourage greater investment inflows into Indonesia.
This expectation is supported by the experience of several countries that have successfully developed international financial centers, which have helped attract investment, expand access to financing, accelerate innovation in financial services, and strengthen their positions within global value chains.
To date, Indonesia has not yet established a dedicated zone that functions as an international financial center. (KEN)
