Indonesia’s finance ministry official announced on Friday that the country will extend its duty vacation plan for some investments and add new bonuses to help offset the effect of the country’s 15-percent global minimum corporate tax rate.
One of the 140 nations that approved a landmark 2021 agreement that allows governments to levy a top-up tax of 15 % on any profits booked in a state with a lower price is Southeast Asia, which is the largest business there. It aims to reduce taxes contest between nations.
” We will extend the tax holiday… so there would not be any disruption ( on investment )”, Febrio Kacaribu, the head of finance ministry’s fiscal policy agency told reporters.
Under the existing tax holiday rule, certain companies with investment of at least 500 billion rupiah ( US$ 32.30 million ) in Indonesia could get a 0 per cent corporate income tax ( CIT ), for up to 20 years, from the normal rate of 22 per cent.
Nevertheless, with the application of 15 per cent world minimum tax, which is expected to kick off next month in Indonesia, the businesses will then have to spend CIT at 15 per cent, while the state could simply give 7 per cent tax refund.
Febrio claimed the government is looking into different forms of income opportunities, including additional tax incentives, as a payment for the remaining 15 % of the companies ‘ tax rates that they had to spend when the world minimum price became effective, but he could not provide more information.
” Because we do n’t want our taxing rights will be taken by the investor’s origin country”, he added.
Indonesia’s tax trip coverage has been offered to investors who are willing to invest in pioneer companies, such as downstream simple metal, oil and gas processing and toxins.