Tax Holiday in IKN: Investments Must Be Realised No Later Than 2 Years

JAKARTA, DDTCNews - Taxpayers eligible for tax holiday incentives in Nusantara Capital (IKN) must immediately invest after the minister of finance approves the incentives.

As stipulated in Article 39 paragraph (1) of Government Regulation (Gov. Reg.) 12/2023, taxpayers eligible for tax holiday incentives for investments in IKN, partner regions and IKN financial centres must perform investments no later than 2 years after the approval is issued.

“[The applicant must realise the Investment plans no later than 2 (two) years after the approval for the reduction in corporate Income Tax incentives … is issued,” reads Article 39 paragraph (1) subparagraph a of Gov Reg. 12/2023, quoted on Wednesday (8/3/2023).

Specifically for taxpayers eligible for tax holiday incentives for the relocation of the head or regional offices, the relocation must commence no later than 1 year after the approval is issued by the minister of finance.

If these provisions are not fulfiled, taxpayers are subject to penalties in the form of revocation of the tax holiday incentives. Consequently, the taxpayers must pay Income Tax that should be payable as well as the penalties pursuant to statutory tax provisions.

In addition to having to realise investments or office relocation, taxpayers must submit reports on investment realisation and reports on business realisation. Taxpayers relocating offices must submit reports on the realisation of the establishment or relocation of the offices.

Further, taxpayers must also maintain separate bookkeeping between investments eligible for the tax holiday and those not eligible for the tax holiday incentives.

Next, the taxpayers must withhold and collect Income Tax pursuant to statutory provisions in the field of Income Taxes. (rig)