Tax Benefits for Investors in IKN Nusantara

Understanding the Tax Benefits for Investors in IKN Nusantara

  • InCorp Editorial Team
  • 4 August 2023
  • 5 minute reading time

As the development of Ibu Kota Nusantara (IKN Nusantara) gains momentum, the government has introduced a range of attractive tax incentives to encourage investment and foster economic growth. These include workforce skills enhancement, green economy development, job creation legislation, and relocating Indonesia’s capital city from Jakarta.

IKN Nusantara and Its Importance for Indonesia’s Economy

The decision to move IKN outside Java Island aims to reduce the spatial concentration of Indonesia’s economy. The government is also considering the population growth and limited capacity of Java Island. 

Therefore, the government emphasizes that the development of IKN Nusantara goes beyond infrastructure. The new capital is based on the concept of a future smart forest city. This concept will incorporate innovation and technology to support economic diversification while preserving Kalimantan Island’s environmental role.

The construction process of the new capital of Indonesia is expected to employ many workers. Thus it will positively impact the Indonesian economy. It encompasses intermodal connectivity, agriculture corridors, and disaster management. 

In achieving that,  the involvement of stakeholders, including the Indonesian Engineers Association, is crucial for realizing IKN as a catalyst for Indonesian civilization. Engineers are expected to contribute by developing innovative technologies.

Not only that, the contributing stakeholders must promote renewable energy and ensure sustainable and modern development. The government encourages the private sector and the public to participate in building IKN, offering funding support through the Public-Private Partnership scheme. 

Furthermore, the government aims to improve human resources through vocational education, providing tax incentives for development costs.

Read more: Unlocking Investment Opportunities in The New Capital of Indonesia

Government’s Efforts to Attract Investors to IKN Nusantara

Tax Benefits for Investors in IKN Nusantara

Below are the government’s endeavors to enhance the appeal of the IKN Nusantara development project in East Kalimantan and attract the attention of potential investors.

1. Market Sounding

The government is actively engaging with potential investors through market-sounding activities. These include attending business forums, participating in investment forums, and meeting with potential investors. 

Countries like Malaysia, South Korea, Spain, and Finland are interested in participating in the IKN development project. In addition, the government has received numerous letters of intent from potential investors across various sectors.

2. Authority Business Agency

The government has formed the Authority Business Agency, derived from the state-owned enterprise PT Bina Karya. This move is made to implement investment cooperation with private parties. The agency functions to support economic transformation in the IKN and East Kalimantan. 

3. Investment Convenience

The government proposes ease of investment regulation to provide legal assurance for investors, including incentives such as tax holidays and special treatment in customs and excise.

Overall, the government is taking comprehensive steps to attract investors to the Nusantara IKN development project, including market sounding, the establishment of the Authority Business Agency, and implementing investment convenience measures. These efforts aim to realize the project while minimizing the burden on the state budget.

List of Tax Exemptions for Investors in IKN Nusantara

​​The Indonesian government offers tax incentives to investors who invest in the Nusantara Capital City. The tax incentives are outlined in Government Regulation (PP) Number 12 of 2023, including various corporate income tax reductions (PPh) and other tax benefits. 

The incentives provided include the following:

  • Reduction of corporate income tax for domestic corporate taxpayers.
  • Reduction of income tax for financial sector activities in the financial center.
  • Reduction of corporate income tax for the establishment and/or relocation of head offices and/or regional offices.
  • Reduction of gross income for work practices, internships, and learning activities for human resource development.
  • Reduction of gross income for specific research and development activities.
  • Reduction of gross income for contributions and costs of non-profit public and social facilities.
  • Government-borne income tax (PPh) Article 21 for employees.
  • Zero percent final income tax on certain business activities in micro, small, and medium-sized enterprises (MSMEs).
  • Reduction of income tax on rights transfer to land and/or buildings.

The tax incentives apply to investments of at least IDR 10 billion. The assets should have strategic value in infrastructure and public services, economic revival, and other business sectors. The tax incentives aim to accelerate the development and growth of the Nusantara Capital City.


IKN Nusantara represents a significant development project for Indonesia. Accordingly, the government has taken proactive measures to optimize investor interest, including market-sounding activities, the establishment of the Authority Business Agency, and the issuance of investment convenience regulations. 

Furthermore, tax incentives aim to attract domestic and foreign investors, promote economic growth, infrastructure development, and create a sustainable and modern city. 

With these efforts, the Indonesian government is committed to realizing the vision of the Nusantara Capital City and positioning it as a hub for innovation, investment, and sustainable development in the region. 
InCorp Indonesia (formerly Cekindo) offers licensing and company registration services to support investors interested in contributing to developing a thriving new capital city in Indonesia. By providing ease and expertise in navigating the regulatory regime, investors can benefit from a streamlined process and better understanding.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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Frequent Asked Questions

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