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Indonesia To Offer Tax Holidays To More Industries

by Mary Swire,, Hong Kong

31 July 2015

The Indonesian Government has announced its intention to amend regulations to extend the list of "pioneer" industries able to take advantage of tax holidays.

Under existing regulations, companies granted "pioneer status" receive 70 percent exemption from income tax for a period of between five 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.

According to an announcement by the Ministry of Finance, the tax holiday regulations will be changed to 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.

The Ministry of Finance intends to issue the amendment by early August.

Commenting on the measure, Minister of Finance Bambang P.S. Brodjonegoro said: "This has been consistent with the Government's vision, boosting maritime, boosting infrastructure, and down streaming."

Approved investment projects in Indonesia also received other tax allowances, such as import duty exemptions, accelerated depreciation and amortization, a taxable income reduction worth as much as 30 percent of the realized investment spread over six years, a maximum loss carry-forward facility for a period of 10 years, and a 10 percent income tax on dividends.

TAGS: Finance | tax | investment | business | marine | manufacturing | Indonesia | import duty | dividends | regulation

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