Government incentives and assistance

For all investment projects of PMA, the following facilities will be granted:

a. Import Duties
Relief from import duty or tariffs: 5% or lower.

b. Export Manufacturing

  • Reimbursement (drawback) of import duty on the import of goods and materials needed to manufacture finished products for export.
  • Exemption from VAT and sales tax on luxury goods for materials imported that are to be used in the manufacture of products for export.

c. Bonded Zones

Industrial companies that are located in the bonded areas are provided with the following incentives:

  • Exemption from import duty, excise, income tax of Article 22, VAT on luxury goods on the import of capital goods and equipment including raw materials for the production process.
  • Allowed to divert up to 50% of their exports (in terms of value) for finished products and 60% of their exports (in terms of value) for other than finished products to the Indonesian customs area, through normal import procedures including payment of customs duties.
  • Allowed to sell scrap or waste to the Indonesian customs area, as long as it contains not more than 5% of the material used in the production process.
  • Allowed to lend their own machinery and equipment to their sub-contractors located outside the bonded zone for no longer than two (2) years in order to further process their own products.
  • Exemption of VAT and sales tax on luxury goods on the delivery of products for further processing from bonded zones to their sub-contractors outside the bonded zones or vice versa, as well as between companies in these areas.

Corporation tax and income tax
Income tax is applied to resident corporations and individuals on most sources of increase of economic wealth. Income tax is collected both directly and at source through a wide range of withholding taxes, constituting advanced payments of taxation. The exception is for some source which is taxable as a final tax i.e. local bank time deposit interest, land and building rental, construction services, share transfer via stock exchange market, etc

Dividends
Income tax is not payable on dividends, provided that: 1) dividends are paid out from retained earnings; and 2) company receiving the dividend must own at least 25% of the total paid-in capital.

Acquisition Tax / Property Tax
Acquisition tax is payable on the acquisition of rights to property (land and buildings), and the tax tariff is stipulated at 5%.

Property tax is payable annually on land, buildings and permanent structures. The rate of the tax imposed shall be 0.5%.

Customs Duties / Special Excise Tax / Value Added Tax
Most duties are in the 5% to 40% range. The minimum rate is 0% and the maximum rate is 150%.

Value added tax (VAT) applies to the import and delivery of most goods and services. VAT is collected at a standard rate of 10%.

The requirements of goods to be excised are that they have a special character to be recognized (e.g. ethanol, beverages containing ethanol in all its percentage including the concentrate, and tobacco products).

Goods produced in Indonesia are excised as soon as they are produced. Goods imported are excised at the time of important into the customs territory by virtue of the rules based on the customs law.

Guarantee of overseas remittance
Indonesia has a free floating currency and no foreign exchange controls. However, the Rupiah currency may not be remitted or traded abroad.

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