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INDONESIA: Project Value Now Sole Criterion for FDI Tax Exemption

As a change in investment strategy, the overall value of an FDI-funded project will be the sole criterion in determining its Corporate Income Tax (CIT) exemption entitlement under the country’s investment incentive programme. Previously, CIT exemptions were only on offer for investments in a number of designated priority sectors, including maritime transport, telecommunications, metal processing and agribusiness.

Under the new regime, FDI projects valued at between Rp500 billion (US$36.36 million) and Rp1 trillion will be eligible for CIT exemptions for five years. In the case of FDI projects valued at between Rp1 trillion and Rp5 trillion, a seven-year CIT exemption will apply. The exemptions then continue on a sliding scale depending on investment value – Rp5-15 trillion (10 years), Rp15-30 trillion (15 years) and Rp30 trillion+ (20 years).

In an additional change, companies will now be able to apply for CIT exemptions when initially applying for business permit. Previously, such an application could only be made once an investment permit had been secured.

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