CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

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.