What Tax Incentives Indonesia Offers, and What Closed

The tax incentives Indonesia offers a new investment come to three, and two of them are open to new applicants. The tax allowance reduces net income for an investment in one of the business fields the regulation lists. Two super deductions reduce gross income for spending on vocational training and on research and development.

The third is the reduction of corporate income tax usually called the tax holiday. It still runs for the companies that hold a decision, but the window for new proposals closed on 31 December 2025, and no regulation has reopened it (Minister of Finance Regulation PMK 130/2020, Article 21, as replaced by PMK 69/2024). So this page takes the two open facilities first.

Where the three tax incentives Indonesia offers now stand

The three facilities, side by side

	Tax allowance	Super deductions	Tax holiday
Still open to new applications?	Yes	Yes	No. Proposals closed 31 December 2025
What it attaches to	An investment in a listed business field, or in a listed field in certain regions	Spending on vocational training, or on research and development	A new investment in a pioneer industry
Who decides	The Minister of Finance, through the investment ministry	Training: a notification. Research: an application, assessed by the state research agency	The Minister of Finance

The two open facilities have no application window at all. What each has instead is a rule about when in a project’s life the application or the notification has to be made, and the sections below give it (PMK 81/2024, Article 411(4); PMK 128/2019, Article 7(2)).

The tax allowance, and what it gives

The tax allowance reduces net income by 30% of the value of the investment in tangible fixed assets, including the land used for the main business activity, charged over 6 years at 5% a year (Government Regulation PP 78/2019, Article 3(1)(a), and PMK 81/2024, Article 408(1)(a)). The rules that implement it are now PMK 81/2024 Articles 407 to 422, in force since 1 January 2025; PMK 11/PMK.010/2020, which most published guides still cite, was revoked when they came into force (Article 483).

Three further benefits come with it. Depreciation on the tangible assets and amortisation on the intangibles bought for the investment run at accelerated rates rather than the ordinary ones. Dividends paid to a shareholder abroad are withheld at 10% instead of the general 20%, or at a lower treaty rate where one applies — the general position is in our guide to dividend tax. And a loss may be carried forward for up to 10 years instead of the general 5, on conditions the regulation lists and never by more than 5 extra years (Article 408(1)(b) to (d), and Article 408(3)).

The 30% comes off net income in the annual corporate return, so its worth depends on there being profit to reduce. The value of the assets it is measured on is set by the Minister rather than by the company (Article 410).

Which activities qualify

Eligibility turns on two annexes to PP 78/2019: 166 business fields anywhere in Indonesia, and a further 17 in certain regions (PMK 81/2024, Article 407). An investment in one of them also has to show high investment value or be for export, employ people on a large scale, or carry high local content (PP 78/2019, Article 2(3)).

There is no single rupiah minimum. Each field in the annexes carries its own requirements, so the threshold depends on what the company does rather than on one national figure (Article 2(4)). Expanding an existing business can qualify as well as starting one, although replacing or adding machinery in a production line already in commercial production does not (Article 2(2)).

Making sure the company’s activity matches the annexes

Two practical points decide whether an application is possible at all.

Which codes a company holds also drives its licensing and its risk level, which our guide to OSS (Online Single Submission) and business classification covers.

How the tax allowance is applied for

The application runs through OSS (Online Single Submission), the government’s licensing system. OSS tests the company’s activity against the annexes and notifies it before the proposal goes forward (PMK 81/2024, Article 411).

1. 1
   Before commercial production

   The application

   It goes in through the licensing system with the shareholders’ tax clearance letters and a schedule of the fixed assets in the investment plan.

2. 2
   5 working days

   The decision

   The investment ministry issues it for and on behalf of the Minister of Finance, once the proposal is complete.

3. 3
   Then 6 years

   The charge

   Each year 5% of that asset value comes off net income, until the 6 years are used.

The decision is the Minister of Finance’s, issued by the investment ministry (BKPM) for and on behalf of the Minister within 5 working days of a complete and correct proposal (Articles 412 and 413(2)). All of it happens before production begins, so it belongs with the work of setting up a foreign-owned company rather than coming after it.

The super deduction for vocational training

A company that runs work practice, apprenticeships or teaching in defined competencies deducts the ordinary 100% of what it spends, plus up to a further 100% — 200% in all (PMK 128/2019, Article 2(1) and (2), in force since 9 September 2019). This one was not folded into PMK 81/2024 and still stands on its own.

The extra depends on three things (Article 2(3)):

• A cooperation agreement with a vocational secondary school, a vocational madrasah aliyah, a diploma-level vocational programme, a job training centre, or the manpower authority for people who are not in any employment relationship (Article 1 point 4).
• No fiscal loss in the year it is used. The extra deduction is of no use in a year the company makes a tax loss.
• A valid tax clearance letter, submitted with the notification.

The notification goes through OSS before the training starts, not after it (Article 7(2)), and the costs are reported to the tax office with the annual corporate return for the year they are used (Article 8). What counts is what the activity consumes: the training place and its running costs, instructors, materials, the honoraria paid to those taking part, and competency certification (Article 4).

The super deduction for research and development

Research and development in Indonesia works the same way and reaches further: the ordinary 100% of the cost, plus up to a further 200% (PMK 81/2024, Article 432(2)). The extra is not a single rate. It is built up condition by condition, and the regulation sets out how (Article 432(3)).

Description	%
The ordinary deduction every business takes on its research costs	100
A patent or plant-variety right registered in Indonesia	+50
That same right also registered at a patent office abroad	+25
The research reaches commercialisation	+100
The work done with an Indonesian state research institute or a university	+25
The most that may be deducted, and only where every line above is met. Research that earns none of them is deducted at the ordinary 100%	300

Most research spending earns the ordinary 100% and nothing more. The regulation’s words are paling tinggi — at most — so 300% is the top of a range, reached only where a patent or plant-variety right is registered in Indonesia and also abroad, the work reaches commercialisation, and it was done with a state research institute or a university.

The right has to be registered in the taxpayer’s own name, alone or with its research partners, and may not be transferred; a transfer turns the deductions already taken into taxable income (Article 436). The application goes in through OSS with a research proposal, which the government research agency assesses in coordination with the Ministry of Finance (Article 437). Like the training deduction, it begins with a proposal rather than with an entry on the return.

The tax holiday, and the window that closed

The tax holiday is a reduction of corporate income tax for a new investment in a pioneer industry — an industry with broad linkages, high added value, new technology and strategic value for the national economy (PP 94/2010, Article 29, as amended by PP 45/2019). The regulation sets a minimum new investment of IDR 100 billion and lists 18 groups of pioneer industry, among them upstream base metals, oil and gas refining, pharmaceutical raw materials and the digital economy (PMK 130/2020, Articles 2(2) and 3(2)). An investment in a field outside those groups could be put forward as well, if it scored highly enough against the quantitative criteria in the regulation’s own annex (Article 5).

Proposals had to reach the Minister of Finance by 31 December 2025. That is the date the regulation itself sets, and it has not been replaced (Article 21, as replaced by PMK 69/2024). A company that holds a decision keeps what the decision gives it, on the bands the regulation sets out.

The reduction by size of new investment — PMK No. 130/PMK.010/2020 as amended by PMK No. 69 Tahun 2024

	Reduction of tax due	For	Then 2 more years at
IDR 100bn to under 500bn	50%	5 tax years	25%
IDR 500bn to under 1tn	100%	5 tax years	50%
IDR 1tn to under 5tn	100%	7 tax years	50%
IDR 5tn to under 15tn	100%	10 tax years	50%
IDR 15tn to under 30tn	100%	15 tax years	50%
IDR 30tn and above	100%	20 tax years	50%

An extension of the facility into December 2026 has been announced by the Ministry of Finance and widely reported. No regulation carrying it had been promulgated when we last checked the ministry’s own database, on 23 September 2026, so the date above is the position until one is.

A holder that comes within the global minimum tax rules pays the domestic minimum top-up tax, and that applies to a holder whose decision predates the amendment as much as to a later one (PMK 130/2020, Article 15A, inserted by PMK 69/2024). Guidance written before 2026 describes the window as open, because it was open when that guidance was written; much of it also cites the implementing regulations revoked on 1 January 2025.

What this means for your project

For a project being planned now, the tax incentives Indonesia offers are the tax allowance and the two super deductions. The allowance is the one to test first, because it turns on what the company does and where it does it, and because the test has to be passed before commercial production begins. The super deductions follow the spending rather than the investment, so they are worth a look in any year a company trains people or develops something of its own.

Two things decide whether the allowance is available at all: whether the registered activities match the annexes, and whether the application is in before production starts. Where an investment qualifies, we prepare and submit the application as part of our corporate tax and compliance work.