TEMPO.CO, Jakarta - Indonesian President Joko "Jokowi" Widodo scraps mandatory income tax for domestic entrepreneurs who invest in the new capital city or IKN project in the infrastructure and public services sector worth Rp10 billion. This rule is contained in Government Regulation No. 12 of 2023 concerning licensing, ease of business, and investment facilities for businesses in IKN dated March 6, 2023.

“Reduction of corporate income tax as referred to in Article 28 paragraph (1) amounts to 100 percent of the corporate’s income tax owed,” as quoted from Article 29 paragraph 1 in a copy of the PP that Tempo received, on Thursday, March 9.

In the regulation, this tax-free program will be applied to entrepreneurs whose investment has a strategic value to accelerate the new capital city project development which includes infrastructure and public services, economic recovery, and other business fields.

The infrastructure and public services stipulated in the PP include toll roads, airports, health facilities, people's markets, and public transportation, while those related to economic recovery are the construction of shopping malls, star hotels, MICE (meetings, incentives, conventions, and exhibitions), and gas stations.

For the infrastructure sector, the tax exemption will be given for 30 years for investment in 2023-2030, 25 years for investment in 2033-2035, and 20 years for investment in 2036-2045.

For the economic sector, tax exemption is given for 20 years for investment in 2023-2030, 15 years for investment in 2033-2035, and 10 years for investment in 2036-2045.

President Jokowi also provides tax relief for investors in the agricultural cultivation and/or urban fisheries sector, in added value industry and/or industrial engineering, construction service, and real estate services up to 50 percent within a period of 10 years.

M JULNIS FIRMANSYAH

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