Provisions on Investors in IKN Eligible for a Tax Holiday for 30 Years

JAKARTA, DDTCNews – President Joko Widodo has issued Government Regulation (Gov. Reg.) 12/2023 which stipulates the granting of various fiscal incentives, including tax holidays, for investors in Nusantara Capital (IKN).

Gov. Reg. 12/2023 states that investors in IKN are eligible for the reduction in corporate Income Tax incentives of 100%. The incentives may be granted for a maximum of 30 years.

“The reduction in corporate Income Tax incentives are provided for an Investment value of a minimum of IDR10 billion,” reads Article 28 paragraph (2) of Gov. Reg. 12/2023, quoted on Wednesday (8/3/2023).

Tax holiday incentives are provided for investments in business sectors with strategic values to accelerate the construction and development of IKN which include public infrastructure and services; economic recovery; and other business sectors.

In respect of investments in public infrastructure and services, the government stipulates 17 types of projects that are feasible for construction, including in the form of power plants, including new and renewable energy.

Next, the construction and operation of toll roads; the construction and operation of seaports; the construction and operation of airports; the development and provision of clean water; the construction and operation of health facilities; 

Further, the construction and operation of educational units; the development and provision of telecommunication and informatics infrastructure; the construction and management of city forests; the construction of housing, residential and office areas.

Next, the development and management of wastewater; the construction and management of underground utility network systems; the construction and operation of industrial and science parks.

Moreover, the construction and operation of people’s markets; the provision of public transportation; the construction and operation of passenger or goods transport vehicle terminals; and the construction and operation of stadiums/sports facilities.

For economic recovery, projects given the incentives include the construction and operation of shopping centres (malls); the provision of tourism facilities and accommodation/star-hotel services; the provision of meeting, incentive, convention and exhibition (MICE) facilities; and refueling and/or battery charging stations for electric vehicles.

Other business sectors are in the form of agricultural cultivation and/or urban fishery; value-added industry and/or industrial engineering; hardware and/or software industry; trading services; construction services; real estate brokerage services; and tourism services and creative economy.

Investments in the public infrastructure and service business sector will be granted a tax holiday for 30 tax years for investments performed from 2023-2030 and 25 tax years from 2031-2035 and 20 tax years from 2036-2045.

On the other hand, the tax holiday for the economic recovery business sector is granted for 20 tax years, for investments performed from 2023-2030, 15 tax years for Investments from 2031-2035 and 10 tax years from 2036-2045.

The reduction in corporate Income Tax for other business sectors is granted for 10 tax years for investments performed in 2023-2030 and 10 tax years for investments performed in 2031-2045.

“Excluded from the [tax holiday] for the reduction in corporate Income Tax for other business sectors granted for 10 tax years …, the reduction in corporate Income Tax is granted by 50% (fifty percent) of the percentage of the reduction in income tax,” reads Article 29 paragraph (5) of Gov. Reg. 12/2023. (rig)