Indonesia Issues New Tax Holiday Regulations

Indonesian Finance Minister Bambang Brodjonegoro has issued new regulations expanding the availability of Indonesia's pioneer industry tax holiday scheme.

The new regulations, 159/PMK.010/2015, increase the list of industries covered by the pioneer tax incentive from five to nine and increase the level and duration of the tax holiday.

Under existing regulations, companies granted "pioneer status" receive 70 percent exemption from income tax for a period of between 5 and 10 years, plus various allowances. This tax incentive currently applies to companies operating in the following five "pioneer" industries: metals; oil refining, including chemicals derived from oil and natural gas; machinery; renewables; and communication devices.

The new regulations allow for tax exemptions of up to 100 percent for periods of up to 15 years, extendable by five years. They also include a further four industries within the pioneer scheme, including those companies engaged in: the manufacture of agricultural products; marine transportation; manufacturing where it is the main activity in a special economic zone; and economic infrastructure, excluding those taxpayers using a government and business entity partnership scheme.

Brodjonegoro also said that the new regulations simplify procedural and administrative aspects of the scheme, making it less bureaucratic and easier for companies to claim. 

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