However, it is essential to note that the application to legalize documents may be rejected if the document is in the following condition:

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• the specimen is not suitable;

• documents are unreadable;

• information is not in line with the uploaded documents; and/or

• there is a report which indicates data misuse and information by the applicant.

 

If the documents are not legalized based on the abovementioned procedures, the documents cannot be used correctly either in the territory of the Republic of Indonesia and abroad as a consequence. It is important to note that falsifying legalization is punishable by a maximum imprisonment of 6 (six) years. Moreover, forgery of documents is punishable by a maximum imprisonment of 8 (eight) years if the following documents are forged:

 

• authentic deeds;

• in debentures or certificates of debts of a state or part thereof or of a public institution;

• in shares or debentures or share certificates or debt certificates of an association, foundation, partnership, or company;

• in counterfoils, dividend or interest evidence belonging to one described documents under the preceding numbers, or in evidence issued in substitution for these documents; and/or

• in credit or commercial papers intended for circulation.

 

The Role of Notary and Notarial Documentation

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The involvement of a notary is required in conducting transactions in various sectors. The notary is a public official who is authorized to make authentic deeds and has other powers referred to in Law No. 30/2004. In general, public notaries are authorized to make authentic deeds regarding all agreements and stipulations required by laws and regulations and/or a matter needed to be stated in an authentic deed. Moreover, the notary is also authorized to guarantee the deed’s drafting date, keeping the deed, providing the grosse, copy, and except the deed.

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The public notaries are also authorized to do the following matters:

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• to validate the signature and set a specific date of the private letter by registering in a particular book;

• to book personal letters by registering for a specific book;

• to make a copy of the original private letters in the form of a copy containing a written description in the said letter;

• to validate the compatibility of the photocopy with the original documents;

• to provide legal education in connection with the making of the deeds;

• to make the deeds relating to the land matters; and

• to make a deed of auction minutes.

 

However, it is essential to note that aside from the abovementioned, a notary is specifically required for the matters relating to the legal entities such as limited liability company, foundation, and cooperatives and land matters as follows:

 

The Role of Notary related to the Existence of Limited Liability Companies

 

The Deed of Incorporation and Articles of Association of Limited Liability of Companies

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The notary shall draft the deed of incorporation of limited liability companies in Indonesia. Besides, the deed of incorporation shall include AoA and other matters as follows:

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• full name, place, and date of birth, occupation, residential, and nationality of the individual founder, or name, domicile, and complete address, as well as the number and date of the ministry of law and human rights decree regarding the ratification of legal entity promotors of the company;

• full name, place, and date of birth, occupation, residential, and nationality of the first members of the BoD and the BoC to be appointed; and

• names of shareholders who have subscribed to the shares, the detail of the number of shares and nominal value of shares subscribed and paid-up.

 

Moreover, AoA of the company must include the following matters:

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• name and domicile of the company;

• purposes and objectives as well as the business activities of the company;

• period of incorporation of the company;

• amount of authorized capital and issued capital, and paid-up capital;

• number of shares, shares classification if any, including the number of the shares for each category, rights attached to each share, and share nominal value;

• name of title or position and the number of members of the BoD and the BoC;

• determination of the place and procedures for holding a GMS;

• methods of appointment, replacement, and dismissal of the members of the BoD and the BoC; and

• method for profit utilization and dividend distribution.

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If the shareholders intend to amend the AoA, the amendments shall be declared under notarial deeds in Indonesian. However, it is essential to note that if the amendment is not drawn up in a notarial deed of minutes of the meeting, it shall be drawn up in a notarial deed not later than 30 (thirty) days the date of the resolution of the GMS.

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It is worth noting that following amendments of the AoA shall obtain the approval of MoLHR:

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• name and/or domicile of the company;

• purposes and objectives as well as business activities of the company;

• period of incorporation of the company;

• amount of authorized capital;

• reduction of issued and paid-up capital; and/or

• change of the status of the company from private company to issuer or otherwise.

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The MoLHR must be notified of any other matters of amendments not mentioned above. The notary shall submit application for approval and/or notification of the amendment of AoA to the MoLHR within 30 (thirty) days since the date of the notarial deed containing the amendments of the AoA.

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Transfer of Shares

 

The notary has an important role in the transfer of shares as such transfer shall be conducted in a deed of transfer of right. Transfer of shares can be executed by way of sale and purchase, grants, or inheritance. Subsequently, notary shall submit notification of the change of shareholding composition due to transfer of right to the MoLHR within 30 (thirty) days since the registration date of such transfer of right over the shares.

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Mergers, Acquisitions, Consolidations, and Spin-offs

 

The plan of merger, consolidation, acquisition, and spin-off which has been approved by the GMS shall be set forth into the deed drawn up by notary in Indonesian. In addition, deed of acquisition which is executed directly from the shareholders shall be obliged to be stated in a notarial deed in Indonesian.

 

Specifically, for consolidation, deed of consolidation drawn up by notary shall be the basis for the drawing up the new consolidating company’s deed of incorporation. The notary shall enclose the copy of deed of consolidation in the application to the Ministry of Law and Human Rights for obtaining the Ministry of Law and Human Rights Decree regarding the ratification of consolidating company.

 

The Role of Notary related to the Existence of Foundations

 

The Deed of Incorporation and Articles of Association of Foundations

 

The incorporation of foundations shall be carried out by means of a deed of incorporation made in Indonesian. The deed of incorporation shall at least incorporate AoA and other matters as follows:

 

• name and domicile of the foundation;

• purposes and objectives;

• period of incorporation of the foundation;

• the amount of initial assets separated from the personal assets of the founder in the form of money or goods;

• how to acquire and use assets;

• procedures for the appointment, dismissal and replacement of members of Governing Board/Pembina, Executive Board/Pengurus, and Supervisory Board/Pengawas;

• rights and obligations of Governing Board/Pembina, Executive Board/Pengurus, and Supervisory Board/Pengawas;

• procedures for organizing foundation’s organ meeting;

• provisions regarding amendments to the AoA;

• merger and dissolution of foundations; and

• use of remaining assets upon liquidation or distribution of foundation’s assets after dissolution.

 

A foundation obtains its legal entity status upon the approval of deed of incorporation by the MoLHR. The notary shall file an application of such approval to MoLHR within 10 (ten) days from the signing date of foundation’s deed of incorporation. Such application shall be filed by the notary in writing. The approval of this application will be delivered within 30 (thirty) days from completion of application.

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It is important to note that foundation’s AoA may be amended. An exception to this that the foundation’s aims and objectives cannot be amended. Amendments to the foundation’s AoA can only be executed based on a Governing Board/Pembina’s meeting resolution. Such meeting can be convened if attended by at least 2/3 (two thirds) of the number of Governing Board/Pembina’s members. The amendment of AoA shall be incorporated under notarial deed in Indonesian.

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In Merger Process

 

A merger in respect of a foundation can be done by merging 1 (one) or more foundations with other foundation, resulting in dissolution of the merging foundations. The proposal for foundations mergers can be submitted by the Executive Board/Pengurus to Governing Board/Pembina. A merger in relation to a foundation can only be carried out based on the Governing Board/Pembina’s meeting resolution attended by at least ¾ (three quarters) of the number of Governing Board/Pembina’s members and approved by at least ¾ (three quarters) Governing Board/Pembina’s attending members.

 

Foundation merger plan shall be approved by each foundation’s Governing Board/Pembina. Upon approval, said merger plan shall be incorporated under merger deed drawn up by notary in Indonesian. Such merger plan deeds shall be conveyed by notary to Minister of Law and Human Rights to obtain approval in case the merger is followed by amendment of foundation’s AoA. The approval from MoLHR will be provided within 60 (sixty) days upon the acceptance date of application.

 

The Role of Notary related to the Existence of Cooperatives

 

The incorporation of cooperatives shall be carried out by means of deed of incorporation containing AoA. The AoA shall at least cover the following:

 

• list of promotors;

• name and domicile of the cooperatives;

• purposes and objectives as well as the business activities;

• provisions regarding membership;

• provisions regarding management;

• provisions regarding capital matters;

• provisions regarding the duration of association;

• provisions regarding remaining results of operations; and

• provisions regarding penalty.

 

Meanwhile, the amendment of cooperative’s AoA to be carried on based on members’ meeting resolution. If the AoA does not stipulate otherwise, the resolution can be carried out if the meeting is attended by at least ¾ (three quarters) of the members and approved by at least ¾ (three quarters) Governing Board/Pembina’s attending members.

 

MoCSME will provide the ratification of amendment of cooperative’s AoA within 30 (thirty) days at the latest if:

 

1. it does not contravene with Law No. 25/1992; and

2. it does not contravene with public order and decency.

 

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The Deed, Legalization, and Waarmerking

 

Deed

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A notary carries out their position in the context of providing legal services to the public, recording all legal events into an authentic deed and automatically guaranteeing the certainty of the making of the deed, keeping the deed, providing grosse, copies and quotations of the deed.

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A deed functions as proof of rights in the form of authentic written evidence made before or by an authorized official. The authorization of the official will ensure that an agreement, stipulation, or a legal event made or carried out has received legal certainty and protection.

 

Moreover, the authenticated deed contains the rights and obligations of the parties. Should any dispute arise between the parties in the future, the authenticated deed can act as valid proof.

 

Legalization

 

Legalization is referred to the notary’s act of legalizing signatures and determining the certainty of the date of the private letter. The legalization is then recorded or registered in a special book. Such special book lists the validation of signatures and the determination of the date of a document related to letters, lists, household affairs letters, and other writing documents made without intermediaries or made not in the presence of a public official.

 

Waarmerking

 

Waarmerking is not clearly defined or regulated by prevailing regulations in Indonesia. However, Law No. 30/2004 implicitly stipulated waarmerking as the act of recording private letters by registration in a special book. In practice, the notary’s authorization is also known as underhand registration of letters with the code: "Register" or Waarmerking or Waarmerk.

 

The Role of Notary related to Land Transactions

 

The General Role of Notary in Land Transactions

 

A notary who is also eligible to act as PPAT plays important roles in transactions of land. PPAT can concurrently serve as a notary at the domicile of a notary. The main task of PPAT is to carry out land registration activities by making deeds as evidence of certain legal actions as follows:

 

• sale and purchase;

• exchange;

• grant;

• deposit in kind (inbreng);

• sharing of joint rights;

• granting of HGB or right to use over freehold title;

• granting security right; and/or

• granting power of attorney to encumber security right.

 

The PPAT’s working area is in one province region. In order to execute the abovementioned tasks, the PPAT is authorized to make authentic sales and purchase of land deeds in connection with all legal aspects concerning land titles and right of ownership over stacked units/hak milik atas satuan rumah susun located within their working area. Besides, the making of such deeds shall be witnessed by at least 2 (two) witnesses.

​

Land Registration and Encumbrance of Right

 

Transfer of land titles and right of ownership over stacked units/hak milik atas satuan rumah susun through sale and purchase, exchange, grants, deposit in kind (inbreng) and other legal actions of transfer of rights, except the transfer of rights through auction can only be registered if it is proven by deeds made by the authorized PPAT according to the provisions of prevailing laws and regulations.

 

Within 7 (seven) business days from the signing date of the relevant deed, PPAT is obliged to submit the deed made along with the relevant documents and written notification to BPN to be registered.

 

Moreover, PPAT is also obliged to register encumbrance of right over land such as security right, right to use and right to lease for buildings, and other encumbrance over land titles or right of ownership over stacked units/hak milik atas satuan rumah susun determined by drafting authorized deeds in accordance with applicable laws and regulations. Registration of encumbrance of rights over land must also be submitted within 7 (seven) business days from the signing date of the relevant deed to BPN, by attaching relevant documents and written notification.

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Mortgage/Hak Tanggungan

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Mortgage is a right over collateral imposed on land title along with other objects which are an integral part of the land therewith for the settlement of certain debts, which give priority to certain creditors over others. Mortgage shall be stated in mortgage deed drafted by a notary who is also eligible to act as PPAT. The purpose of mortgage deed is to ensure the settlement of more than 1 (one) debts. If 1 (one) land is encumbered with more than 1 (one) mortgage right, then the rank of each security right is determined according to the date of registration at the BPN. In the event that there is more than 1 (one) security right registered on the same date, then the rank is determined by the drafting date of relevant security right deed.

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A mortgage shall be registered to BPN. Within 7 (seven) business days from the signing date of security right deed, PPAT shall submit such security right deed and other relevant documents to BPN to be registered. Moreover, the encumbrance of security right may also be performed by way of providing power of attorney from relevant party. The power of attorney shall be drafted by notarial deed and shall comply with the following terms, it must:

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• not including the authorization to do other legal action other than the encumbrance of security right;

• not mention any substitution right; and

• provide clear information on the object of mortgage, outstanding amount, name and identity of creditor, name, and identity of debtor in case the debtor is not the grantor of security right.

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The power of attorney shall not be revoked or terminated unless the expiration period has passed. The relevant power of attorney must also be followed by the drafting of security right deed within 1 (one) month at the latest, upon providing it to PPAT. The notary is also responsible for registering the transfer of security right to BPN due to cessie, subrogation, inheritance, or other reasons that caused the security right to be transferred to new creditor.

 

Taxation

 

Taxes are mandatory contributions from individuals or entities to the state, where it will be utilized to meet the state’s necessity and the people’s welfare. The government utilizes taxes to give equal distribution of welfare by providing health insurance, government support or aid, and public facilities procurement.

 

In regard to parties who are obligated to pay taxes, generally every individual whether Indonesian citizens or foreign citizens residing in Indonesia and entities that incorporated or domiciled in Indonesia are included as taxpayers, unless the laws and regulations stipulate otherwise. Hence, it can be understood that taxpayers are classified into 2 (two) categories, and along with these following provisions:

 

• Individuals

  1. who receive income above Non-Taxable Income/Penghasilan Tidak Kena Pajak (PTKP), as the limit is determined and regulated under Law No. 7/1983; and

  2. who stay in Indonesia for more than 183 (one hundred and eighty-three) days in any 12 (twelve) months period, or individuals who live in Indonesia during a tax year and intend to reside in Indonesia.

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• Entity

1. unity of a group of people and/or capital, whether doing business, including limited liability company, limited partnership, other form of companies, state-owned enterprise, or regional government-owned enterprise in any form, firm, joint venture, cooperative/koperasi, pension funds, associations, partnership, foundation, mass organization, socio-political organization, institutions, or any other organizations or institutions including collective investment contracts and permanent establishment/badan usaha tetap; and

2. incorporated domiciled, or effective place of management in Indonesia.

 

Tax Identity

 

Subsequently, for the purpose of tax administration and to implement self-assessment system, taxpayers have the obligation to register themselves to KPP, KP4, or through e-registration at www.pajak.go.id to be given tax identity. The form of tax identity is divided into 2 (two) categories, namely, NPWP and NPPKP.

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NPWP

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The NPWP is a number issued to a taxpayer as means of taxation administration which is used as a personal identity or taxpayer identity in conducting his taxation rights and obligations. The NPWP is necessary to be obtained by taxpayers, otherwise the taxpayer can be subject to a rate 100% higher than the tax rate applied to taxpayers who have NPWP.[2] In addition, holding a NPWP is fulfilling one of the requirements in processing SIUP.

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NPPKP

​

The NPPKP is an identity of taxpayers who are categorized as PKP and subject to both VAT and VAT on Luxury Goods. In order to be confirmed as a PKP, local research will be carried out to determine the existence and activities of business concerned. With the inauguration of an entrepreneur as PKP, a tax invoice/faktur pajak must be issued upon delivery of taxable goods or taxable services.

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Tax Collection System

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Generally, there are 3 (three) types of tax collection system, namely self-assessment system, official assessment system, and withholding assessment system. Since the amendment of tax laws and regulations in 1983 – known as Indonesian tax reform, Indonesia has changed its tax collection system from official assessment system to self-assessment system. As for now, self-assessment system is the most used tax collection system in Indonesia.

 

Self-Assessment System

 

Through the self-assessment system, taxpayers are required to carry out their tax obligations independently. They must register themselves, calculate their own payable tax, pay taxes to the bank or post office, and report the calculation results and tax payments that have been made to KPP. Furthermore, the tax collection system is applicable for the imposition of central taxes, such as income tax and VAT which will be explained further in the next section.

 

Official Assessment System

 

The official assessment system is one of the tax collection systems which enables the tax authority as tax collector to determine the amount of tax payable by taxpayers. In this type of tax collection system, the taxpayer is passive as the payable tax is determined and informed by the tax authority. The official assessment system applies to regional taxes, such as land and building tax which will be explained further in the next section. 

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Withholding Assessment System

 

In the withholding assessment system, the amount of payable tax is calculated by third parties who are neither taxpayers nor tax authorities. This type of tax collection system makes tax obligations easier to meet. This is because it is the role of third parties to calculate the tax payable and directly withdraw certain amount of taxes that should be paid by each taxpayer. An example of a withholding system is a deduction of employee income by the treasurer, other parties who are eligible to deduct or the related agency. Hence, the employees no longer need to fulfill or pay their payable tax themselves. Indonesia imposes a withholding assessment system for several types of taxes, including:

 

• Article 4 (2) Law No. 7/1983 (PPh Final), regarding tax imposed on entity and/or personal taxpayers for several types of income specified in Article 4 (2) Law No. 7/1983, where both of the income and the withholding tax are final;

• Article 21 Law No. 7/1983 (PPh 21), regarding tax imposed on income in the form of salaries, wages, allowances, and other payments in connection with employment, services, honorarium, and activities conducted by individuals who are resident tax subjects;

• Article 22 Law No. 7/1983 (PPh 22), regarding income tax imposed on certain business entities, both government and private, who carry out export and import activities;

• Article 23 Law No. 7/1983 (PPh 23), regarding tax imposed on income in the form of dividend, interest, royalty, gift, bonus, rent and other income in connection with the use of assets, excluded from rent for land and/or buildings, fees in connection with technical, management, construction, consulting services, and other services that have been deducted by Article 21 Law No. 7/1983 (PPh 21).

• Article 26 Law No. 7/1983 (PPh 26), regarding tax imposed to tax subjects who provide income to foreign tax subjects. 

 

Types of Tax in Indonesia

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In Indonesia, taxes are classified into 2 (two), which are central taxes/pajak pusat and regional taxes/pajak daerah. Central taxes are managed by the central government, particularly by the Directorate General of Taxation under the Ministry of Finance. Subsequently, the types of taxes which categorized as central taxes are as follows:

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• income tax;

• VAT;

• VAT on luxury goods;

• stamp duty;

• land and building tax; and

• acquisition of rights on land and buildings duty.

 

Whereas, regional taxes are taxes managed by the regional governments at both the provincial and regency level. In this case, regional taxes are handled by the Regional Revenue Agency/Dinas Pendapatan Daerah which governed under Law No. 28/2009. Regional taxes are further divided into 2 (two), namely provincial taxes and regency/city taxes.

 

• provincial taxes

  1. motor vehicle and water vehicle taxes;

  2. excise/tax for transfer of ownership of motor vehicle;

  3. motor vehicle fuel tax;

  4. surface water tax; and

  5. cigarette tax

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• regency/city taxes

  1. hotel tax;

  2. entertainment tax;

  3. restaurant tax;

  4. parking tax

  5. advertisement tax;

  6. tax on non-metal mineral and rock;

  7. street lighting tax;

  8. ground water tax;

  9. tax on sallows' nest.

  10. rural and urban and building tax; and

  11. excise/tax acquiring right on land and building.

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Income Tax

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Income Tax/Pajak Penghasilan (PPh) is a tax imposed on an individual or entity on income they earned or received in a tax year. Subsequently, the object of income tax is that any additional economic capacity derived from Indonesia or outside Indonesia that can be used by the taxpayer for consumption or to increase wealth’s of the respective taxpayer. The taxable objects of income tax can be in the form of salaries, bonuses, honorarium, any other compensation for the work’s performance, business profits, interests, royalties, and any other incomes stipulated in Law No. 7/1983. Subsequently, in order to support ease of doing business, the government exempts dividends distributed based on GMS (interim dividends) and dividends originating from within Indonesia received by domestic taxpayers, as the object of income tax.

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Under the Law No. 7/1983, the subject of income tax is distinguished into 2 (two) types, there are domestic tax subject and foreign tax subject. Domestic tax subject includes any individuals who reside, or entities incorporated or domiciled in Indonesia within the period of time specify in Law No. 7/1983. While foreign tax subject includes any individuals who are not reside, or entities incorporated or domiciled outside Indonesia. Furthermore, income tax is imposed on tax subject who is obliged to pay, withhold, and collect taxes due on tax objects. Hence, the subjects of income tax could be either:

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• individual;

• entity or corporate; or

• permanent establishment/badan usaha tetap.

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Value Added Tax (VAT)

 

VAT is a tax imposed on the consumption of taxable goods or taxable services in a customs area. Customs area/daerah pabean refers to the territory of the Republic of Indonesia which includes land, waters, and air space thereon. Individuals, entities, or government who consume taxable goods or services are subject to the imposition of VAT. Generally, all goods and services are categorized as taxable goods or services, unless otherwise stipulated by the Law No. 8/1983. The following are the objects of VAT which will be imposed to entrepreneur who conduct:

 

• local delivery of taxable goods and/or services;

• import and export of taxable goods;

• consumption of services and/or intangible foods from offshore within the Indonesian customs territory; and

• export of intangible taxable goods and taxable services.

 

However, the goods and services which are exempted from the obligation of VAT are specified in Article 4A Law No. 8/1983, for instance basic necessities of the community.

 

The producer of goods and/or services, who is the PKP, collect, deposit, and report the VAT. However, the party who is obliged to pay the VAT is the end consumer of the goods and/or services produced by the PKP. The end consumer will be imposed on single VAT rate at 10% (ten percent), and in terms of exports, the VAT rate is 0% (zero percent).

 

Value Added Tax on Luxury Goods

 

Aside from being subject to VAT, the purchases of certain taxable goods which are classified as luxury goods are also subject to VAT on luxury goods/pajak pertambahan nilai atas barang mewah. This tax imposition has the same characteristics as VAT, which is imposed to the end consumer who consumes or utilizes the goods. The objects of taxable luxury goods and their rates are stipulated and regulated in the sectoral regulations regarding VAT on luxury goods, which includes:

 

• goods that are not included as basic necessities;

• goods that only consumed by certain communities;

• goods that generally consumed by high-income communities; and/or

• goods that are consumed to indicate the status.

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Furthermore, Article 8 (1) Law No. 8/1983 stipulates the sales tax rate on luxury goods of at least 10% (ten percent) and a maximum of 200% (two hundred percent).

 

Land and Building Tax

 

Land and building tax are tax imposed on ownership or utilization of land and/or buildings. In basic terms, it is categorized as one of the central taxes, however almost all of the realization of land and building tax revenue is submitted to the regional government, both provincial and/or regency/city. Subsequently, the objects of land and building tax are:

 

• environmental roads located within building area such as hotel, factory and its emplacement, and other buildings that are within the building area;

• toll road;

• swimming pool;

• luxury fence;

• sport venue;

• shipyard and dock;

• luxury garden;

• oil, water and gas storages/refineries, and oil pipelines; and

• other facilities that produce benefit.

 

The subject of land and building tax is a person or an entity that have the rights over the land and/or receive benefits over the land, and/control and/or receive benefit from a building. Based on Article 5 Law No. 12/1985, the tax rate imposed on land and building is 0.5% (five tenth percent). Subsequently, land and building tax is imposed based on sales value of 

taxable object/nilai jual objek pajak. Sales value of taxable object is the average price obtained from reasonable buying and/or selling transactions, and if there is no such transaction, the sales value of taxable object will be determined by price comparisons with other similar objects, obtaining new value, or selling value of the replacement tax object.

 

Aside from an obligation to pay land and building tax, ownership through the acquisition of rights over the land and/or buildings also gives rise to BPHTB. As well as land and building tax, BPHTB categorized as central tax, however its realization revenue is submitted to the regional government, both provincial and/or regency/city.

 

Stamp Duty

 

Stamp duty/bea materai is a tax imposed on certain documents. It is imposed on documents which represent the occurrence of civil relation and it can be used as a valid evidence in court. The documents which require stamp duty are specify in Law No. 10/2020, as follows:

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• letter of agreement;

• certificate;

• letter of statement;

• notarial deed;

• land deed made by PPAT;

• securities transaction documents;

• auction documents;

• documents stating the amount of money with a nominal value more than Rp5.000.000,- (five million Rupiah) that mentions the receipt of money or contains acknowledgment that the debt in whole or in part has been paid or taken into account; and

• other documents.

 

Stamp duty is payable as a fixed amount of Rp10.000,- (ten thousand Rupiah) for documents as mentioned above.

 

Taxes Exemptions

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In relation to the ease of doing business in Indonesia, the government provides a facility in a form of tax holiday. Tax holiday is a tax incentive for entrepreneurs. Taxpayers who conduct a new investment in a pioneer industry may obtain reduction or even exemption of income tax for entrepreneur in a certain term. Provisions on tax holiday are regulated in Law No. 25/2007, tax holidays are provided through exemption or reduction of corporate income tax in a specific amount and period may only be granted to:

 

• a new investor engaged in a pioneer industry;

• entities with added value and high externality;

• entities which introduces new technology.

• entities with strategic value for the national economy;

• entities with legal status as an Indonesian legal entity; and

• entities which debt-to-equity ratio as prescribed by the ministry of finance of the Republic of Indonesia.

 

In accordance with MoF Reg. No. 130/2020, the tax exemption or reduction facility (tax holiday) applies to these following pioneer industries: