The government plans to revoke the current tax holiday provisions. The tax incentives given to investors are planned to no longer apply in 2023. This plan is in line with the international tax consensus at the G20 forum which has agreed on a global minimum tax of 15%, as well as Pillar 2: Global Anti Base Erosion which will be implemented in 2023. As a member of the G20 and the Organization for Economic and Development (EOCD), Indonesia has also agreed to these provisions. Expert Staff to the Minister of Finance (Menkeu) for Tax Compliance, Yon Arsal, said that the global minimum consensus will affect fiscal incentives such as tax holidays which are used as a sweetener to attract investors. The provision of tax holidays is regulated in the Minister of Finance Regulation (PMK) Number 130/PMK.010/2020 concerning the Provision of Corporate Income Tax Reduction Facilities.
Tax Holiday provides corporate income tax (PPh) exemption to industry pioneers who invest at a certain value with a certain investment period. This tax incentive is disbursed by the government to investors for 5 to 20 years. Furthermore, Yon explained, until now, his party is still conducting further discussions with the Coordinating Ministry for the Economy and the Ministry of Investment/Investment Coordinating Board (BKPM) to determine the fate of tax holiday incentives related to global minimum tax provisions. What is clear is that there is no longer an incentive for corporate income tax exemption. Nevertheless, Yon said, changes to the tax holiday provisions will not affect the investment climate in Indonesia. Because, for other countries that apply tax incentives similar to tax holidays, they must also delete/change them. For that, the government will look at the provisions that also apply in other countries. Although there will be changes in national policy and fiscal (incentives), he hopes it will not affect investor interest. "We have not concluded that (tax holidays) are removed, because this incentive is still one of the instruments used by us and other countries. This is not only our own problem, this is the problem of all countries that use tax holidays and tax allowances and other incentives. ,” said Yon during a media gathering, Thursday (4/11).
On the other hand, Yon said, currently, the Indonesian government is looking at the steps taken by other countries in responding to the impact of Pillar 2 on tax incentive policies. For information, the provisions of the global minimum corporate tax rate have just been approved by 136 Inclusive Framework member jurisdictions in early October 2021.
Sources: https://nasional.kontan.co.id/news/pemerintah-berencana-mencabut-fasilitas-tax-holiday-pada-tahun-2023
