Tax Holiday Indonesia: Eligibility, Incentives, and How to Qualify

Businesses expanding in Indonesia often face high corporate tax rates that reduce profitability. However, the government’s strategic Tax Holiday Indonesia program, designed to attract investment and boost economic growth, grants eligible companies corporate income tax exemptions for a specific period, underscoring its importance and relevance. 

Under PMK 69/2024, the program has been extended until December 31, 2025. The application process is now entirely online via the OSS system. Tax clearance (SKF) is issued automatically, making the process faster and easier and ensuring convenience and efficiency for the applicants.  

Who is Eligible for the Tax Holiday in Indonesia? 

The government strictly defines which businesses can access the Tax Holiday incentive. This ensures that the program attracts strategic investments with significant economic impact. 

Types of Companies That Qualify 

Only companies that meet these criteria can apply: 

• Pioneer Industries: Businesses that introduce new technologies, create high-value-added products, and have a strong multiplier effect on other sectors. 
• Foreign and Domestic Investors: Both can apply, provided they establish an Indonesian legal entity (PT). 
• New Capital Investments: Only projects involving new investment (not expansions of previously incentivized projects) are eligible. 
• Large-Scale Projects: Investments must meet the minimum value (IDR 100 billion) and comply with other financial requirements such as the Debt-to-Equity Ratio (DER). 

READ MORE:

• How To Get Indonesia Tax Incentives via OSS 
• Fiscal Incentives for Oil and Gas Contractors in Indonesia 
• How to Start a Business: 10 Essential Tips for Expanding to Indonesia 

Priority Sectors for Tax Holiday 

Under PMK 69/2024, the tax holiday is offered to 18 priority (pioneer) industries, including but not limited to: 

• Petrochemical Industry: Upstream and downstream processing, including plastics and synthetic materials. 
• Energy and Renewable Energy: Power plants, geothermal projects, solar energy, wind power, and other green energy solutions. 
• Automotive Manufacturing: Production of electric vehicles (EVs), batteries, and other automotive innovations. 
• Infrastructure Development: Public utilities, toll roads, seaports, airports, and railway development. 
• Data Centers and Digital Infrastructure: Investments in cloud services, data storage facilities, and digital connectivity projects. 
• Pharmaceutical and Medical Equipment Manufacturing: Medicines, vaccines, and advanced medical devices are produced. 
• Metal Smelting and Downstream Mining Processing: Processing nickel, copper, bauxite, and other minerals to support downstream industries. 
• Chemical Industry: Advanced chemical production, including industrial gases and specialty chemicals. 
• Machinery and Equipment Manufacturing: High-tech industrial machinery for agriculture, construction, and production. 
• Maritime Industry: Shipbuilding, marine technology, and port equipment manufacturing. 

Indonesia’s Tax Holiday Incentives and Rates 

Participating in Indonesia’s Tax Holiday offers significant corporate income tax (CIT) reductions, boosting profitability and cash flow for eligible companies. PMK 69/2024 (amending PMK 130/2020) states that the Tax Holiday provides different incentives based on investment amounts. 

After the Tax Holiday period ends, companies may still receive a 50% corporate income tax reduction for two additional years. Besides the main corporate tax relief, companies may also benefit from: 

• 50% CIT reduction for investments IDR 100 billion – < 500 billion, plus 25% for two more years. 
• Non-fiscal incentives, such as expedited licensing and customs facilities. 
• Extended benefits if new investments are made during the Tax Holiday period.

Secure Tax Holiday in Indonesia with InCorp 

The Tax Holiday program is a great way to reduce taxes and boost investment returns. However, many businesses struggle due to complex regulations, unclear sector eligibility, application errors, and additional hurdles for multinationals under the Global Minimum Tax (GMT) rules. 

To overcome these challenges, InCorp Indonesia (an Ascentium Company) offers comprehensive tax consulting services, guiding businesses through every step of the Tax Holiday application process, including: 

• Check your eligibility and compliance. 
• Prepare and review all required documents. 
• Handle the OSS online submission. 
• Give strategic advice to minimize risks and maximize benefits. 

Complete the form below to obtain tax incentives and confidently grow your business with proper guidance. 

Frequently Asked Questions