Indonesia Announces New Tax Incentives
Friday, October 23, 2015
The Indonesian Government has cut tax for companies revaluing their fixed assets
as part of a package of economic stimulus measures.
Under existing rules, companies face a 10 percent tax on gains when they revalue
fixed assets. Under the changes, which were announced on October 22 and are
effective immediately, this tax will be reduced to three percent for asset revaluations
undertaken prior to the end of 2015, rising to four percent for asset revaluation
proposals submitted in the first half of 2016 and to six percent in the second
half of the year.
According to the Government, the reason for the measure is to increase companies'
capacity to borrow against fixed asset for investment purposes, or encourage
them to go public.
The Government also intends to streamline the taxation of real estate investment
trusts, which are currently subject to dividend tax and property sales tax.
Finance Minister Bambang Brodjonegoro said that REITs will be exempt from these
two taxes and will instead pay a single tax. The move is designed to encourage investors
in Indonesian property to set up REITS in Indonesia, rather than in tax-advantaged
jurisdictions like Singapore.