Tax Holiday Extended, But Not Defending For Foreign Companies

Minister of Investment and Downstreaming/Head of the Investment Coordinating Board (BKPM) Rosan Roeslani. (Photo: Aris Nurjani/VOI)

JAKARTA - The government has officially extended tax exemption incentives for companies aka tax holidays until December 31, 2025. However, this incentive can no longer be enjoyed by foreign companies in Indonesia.

This incentive cannot be enjoyed by foreign companies because there is a minimum tax policy aka global minimum tax (GMT) agreed by the Organization for Economic Cooperation and Development (OECD) and G20 countries, where multinational companies will be subject to a minimum income tax of 15 percent.

Minister of Investment and Downstreaming/Head of the Investment Coordinating Board (BKPM), Rosan Roeslani explained, if the government does not attract Income Tax (PPh) to foreign companies in Indonesia, then the country of origin of the foreign company will be attractive.

Furthermore, Rosan said that because of that, the tax holiday incentives could no longer be enjoyed by foreign companies, and the government decided to continue to attract PPh.

Indeed, this has an impact on us, on all countries. Because now we have indeed made adjustments. We say that indeed, if the Global Minimum Tax is enforced, if we don't collect a tax of 15 percent, the state concerned will collect it. So the principle of benefit is not in us," said Rosan to reporters, written Monday, November 4.

Furthermore, Rosan also admitted that he had conducted socialization to foreign investors regarding the GMT policy which affected the tax holiday. He said the GMT policy had been implemented in more than 100 countries.

"So we have conveyed to the recipient of this Tax Holiday, if this is enforced, there will be adjustments," said Rosan.

Even so, Rosan appealed to foreign entrepreneurs not to worry. He said the government would provide other incentives to foreign investors, as a substitute for tax holidays.

"Don't worry, because we can provide incentives in other forms, incentives in other forms, which we have conducted assessments, we give them in other forms. So that the Tax Holiday 15 percent can be compensated in other forms, as long as we refer to existing regulations," he said.

On the other hand, Rosan emphasized that domestic companies can still enjoy an extended tax holiday in the Minister of Finance Regulation (PMK) Number 69 of 2024.

Furthermore, Rosan hopes that with this policy, domestic companies will be more motivated to invest in the country.

"So this is actually to encourage and encourage domestic companies to invest more in Indonesia, especially those related to the recipients of Tax Holiday," he said.