Indonesia's budget deficit could rise to 2.2 percent of the nation's gross domestic product (GDP) in 2015 (from a projected 1.9 percent of GDP) as the government's tax revenue may fall short of its target. Based on the revised 2015 State Budget, the government targets to collect IDR 1,489 trillion (approx. USD $110 billion) worth of tax money this year. However, as of August 2015 tax revenue collection stood at 45.8 percent of the 2015 target (or approx. IDR 593 trillion).

Read more ›

Ogan Komering Ilir Pulp & Paper Mills (OKI), a unit of the Sinar Mas Group, has been granted a tax holiday by the Indonesian government for a period of eight years. Other companies that were awarded tax incentives are Unilever Oleochemical Indonesia, Petrokimia Butadine Indonesia, and Energi Sejahtera Mas. Through these incentives the government of Indonesia aims to make Indonesia more attractive for long-term investment thus boosting the nation’s sluggish economic growth.

Read more ›

Today, the Indonesian government announced it extended a tax incentive for “pioneering” industries. This term refers to those industries that are considered key industries that cause a multiplier effect in the Indonesian economy (hence boosting economic) and provide employment opportunities for the local population. Examples of such industries are oil refinery, infrastructure, maritime transport, telecommunications, downstream metal production and agriculture processing. The extended incentive is effective per 16 August 2015.

Read more ›

The Indonesian government targets to narrow the budget deficit to between 1.9 and 2 percent of gross domestic product (GDP) in 2016 from a projected budget deficit of 2.2 percent of GDP in 2015. Indonesian Finance Minister Bambang Brodjonegoro said on Monday (06/07) that in 2016 the government will continue to prioritize spending on infrastructure development as well as energy and food. President Joko Widodo is scheduled to officially announce the 2016 State Budget in a speech in front of parliament on 16 August 2015.

Read more ›

Several international institutions revised down their outlook for economic growth of Indonesia in 2015 as foreign investors have been somewhat disappointed with the performance of the new Indonesian government, while the global economic picture remains far from rosy. Goldman Sachs, JPMorgan Chase, Credit Suisse and Nomura Holdings have all slashed Indonesia’s economic growth forecast this year to below the five percent (year-on-year) mark. Last year Indonesia’s economic growth touched a five-year low of 5.02 percent (y/y).

Read more ›

Bambang Brodjonegoro, Indonesian Finance Minister, announced on Wednesday (27/05) that the Indonesian government may raise the income threshold - which separates individuals’ income that is taxable from non-taxable income - by almost 50 percent. Although this move would imply less tax revenue for the government, it would strengthen the purchasing power of the less fortunate Indonesians and can somewhat boost economic activity in an economy that has been plagued by slowing economic growth since 2011.

Read more ›

On Monday (11/05) it was reported - quoting an Indonesian tax official - that Indonesian President Joko Widodo had already ordered to cut the country’s corporate tax rate from 25 percent currently to below 18 percent in a bid to attract more investment and to make Indonesia’s business environment more competitive (for example, Singapore’s corporate tax is currently 17 percent). One day later, however, Finance Minister Bambang Brodjonegoro stated that, if the corporate tax is to be revised, it will be next year at the earliest.

Read more ›

Starting from January 2015, Indonesian tobacco products are subject to an average tax rise of 8.7 percent. The excise tax on machine-rolled cigarettes becomes IDR 355 (USD $0.03) and on hand-rolled cigarettes IDR 290 (USD $0.02) per stick. The tax hike is implemented by the government in a move to increase state income through tax revenues. The higher excise tax is expected to have a minor effect on tobacco sales in Indonesia as retail prices for cigarettes remain among the lowest in the Southeast Asian region.

Read more ›

Exports of Indonesian crude palm oil (CPO) and its derivatives increased 45.8 percent month-on-month (m/m) to 2.47 million metric tons in October 2014 primarily supported by the zero export tariff that was implemented by the Indonesian government per 1 October. Indonesia has a mechanism that when the average CPO price (which is calculated using international and local CPO prices) drop below USD $750 per metric ton, the export tax is scrapped. In early September, Malaysia had already implemented a zero CPO export tax.

Read more ›

On 9 November 2014, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website in the last seven days. Most of the topics involve economic matters such as GDP growth in the third quarter of 2014, October inflation, higher subsidized fuel subsidies, Islamic finance, unemployment, the IPO of Blue Bird, a crude palm oil update, Indonesia’s tax system, and more.

Read more ›

In the first month of 2022, we detected some positive signs, both abroad and at home (in Indonesia) as there is growing evidence that the Omicron variant is encouraging strong herd immunity around the world, while not making too many people ill to the extent that they require hospitalization.

Read more ›

The COVID-19 pandemic made governments around the world impose severe social and business restrictions, thus contributing heavily to the unprecedented decline in economic activity. To maintain society’s support, governments subsequently had to spend heavily on social assistance, soft loans, and various fiscal incentives to keep most businesses alive and allow poorer segments of society to have enough to eat.

Read more ›

It is something the central government of Indonesia has been planning and weighing for several years now, but the coronavirus (COVID-19) crisis seems to have sped up the efforts. Per 1 July 2020, the Indonesian government imposes a 10 percent value-added tax (VAT) on sales of imported digital products and services.

Read more ›

E-commerce – which refers to the activity of electronically buying (or selling) products through online services or over the Internet – has been developing rapidly in Indonesia over the past decade. More and more Indonesians have started to shop online, forcing many offline retail players to adapt and innovate their business models in order to survive in this new and challenging environment where two newcomers, both tech startups and both e-commerce platforms, have developed into a unicorn (Tokopedia and Bukalapak) which is a startup that is valued above USD $1 billion.

Read more ›

It came as a big surprise to us. Only three days before the new and somewhat controversial e-commerce tax regulation would come into effect, Indonesia’s Finance Ministry decided to delay its execution.

Read more ›

More and more processes are being shifted online as this, generally, allows processes to become more efficient and easier to complete. This also applies to Indonesia's tax office. Over the past couple of years, tax can be filed online by legal entities and individuals. However, before an individual of company can file the tax online, he - or it - first needs to obtain an Electronic Filing Identification Number (EFIN).

Read more ›

Tax is not everybody’s favourite topic of conversation. Nonetheless, it is a crucial subject both for the legal entity and the individual as various taxes need to be filed to authorities. Trying to escape from paying (higher) taxes is a risky affair and can lead to serious sanctions. Similarly, innocent mistakes can also cause problems with tax officials and therefore is it advised to invest some time in understanding the tax system. This advice particularly applies to those who move to different jurisdictions – to work and/or live - as tax regulations may not be the same as the regulations in their home country.

Read more ›

While reforms related to Indonesia’s corporate income tax rates remain in the planning stage, there is a new important regulation that will come into effect per 1 April 2019. Through Finance Ministry Regulation No. 210/PMK.010/2018 on the Taxation of Trade Transactions through Electronic System or E-commerce, which was signed on 31 December 2018, Indonesia will require e-commerce merchants (sellers) to share data with tax authorities and pay VAT and income taxes.

Read more ›

Investors are awaiting a series of fiscal incentives from the Indonesian government, including a new tax holiday. Meanwhile, investors also urge the government to improve the investment and business climate by simplifying the process and procedures to obtain permits for investment projects. This also includes improving the coordination between central and regional authorities, for example through the integration of the permitting process at both levels.

Read more ›

Indonesia's Directorate General of Taxes claims that tax revenue realization in Indonesia will grow by a double-digit figure (on a year-on-year basis) in January 2018. This result comes on the back of strengthening commodity prices that bring in more tax money for the government.

Read more ›