Indonesia: Law updated on bond-related investments and VAT for retail merchant tenants

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Indonesia: Law updated on bond-related investments and VAT for retail merchant tenants

Sponsored by

sponsored-firms-gnv.png
The Indonesian government has made legislative changes to encourage economic growth

Benjamin Simatupang and Siti Nimah Fitriah of GNV Consulting discuss new guidance in relation to bond-related investments and retail merchant tenants.

Withholding tax on interest of bonds

On August 30 2021, the Indonesian government issued Regulation No. 91 of 2021 (GR-91) concerning ‘Income tax on income in the form of interest on bonds received or obtained by domestic taxpayers and permanent establishments’. GR-91 was issued to replace GR No. 16 of 2009 as amended by GR No. 55 of 2019.

The purpose of the issuance of GR-91 is to harmonise the policy of reducing the interest income tax rate on bonds received or obtained by foreign taxpayers, to create an equal income tax burden between bond investors, and to encourage the development and deepening of the local bond market.

GR-91 reduces the WHT rate on bond-related investment earned by resident taxpayers and PEs from 15% to 10%. 


VAT incentive for retail merchant tenants

To encourage national economic growth while maintaining business continuity in the retail trade sector during the COVID-19 pandemic, the government offers incentives in the form of VAT borne by the government for the rental of space or buildings by retail merchant tenants. This is governed by the issuance of Minister of Finance Regulation No. PMK 102/PMK.010/20201 (PMK-102).

The retail merchant tenants that can enjoy this incentive are entrepreneurs who deliver goods or services to end customers as part of their retail business. The VAT borne by the government is applicable for rental charges for the period August 2021 to October 2021 which are billed from August 2021 until November 2021. 

In order to enjoy this incentive, the VATable firm landlord must provide a VAT invoice with certain requirements and prepare a realisation report on the VAT borne by the government. Otherwise, the VATable firm landlord will not be eligible to enjoy this incentive.

 

Benjamin Simatupang

Partner, GNV Consulting Services

E: benjamin.simatupang@gnv.id

Siti Ni'mah Fitriah

Manager, GNV Consulting Services

E: siti.fitriah@gnv.id

more across site & shared bottom lb ros

More from across our site

Encompassing everything from international scandals to seismic political events, it’s a privilege to cover the intriguing world of tax
In his newly created role, current SSA commissioner Bisignano will oversee all day-to-day IRS operations; in other news, Ryan has made its second acquisition in two weeks
In the age of borderless commerce, money flows faster than regulation. While digital platforms cross oceans in milliseconds, tax authorities often lag. Indonesia has decided it can wait no longer
The tariffs are disrupting global supply chains and creating a lot of uncertainty, tax expert Miguel Medeiros told ITR’s European Transfer Pricing Forum
Corporate counsel should combine deep technical knowledge with strategic dynamism, says Agarwal, winner of ITR’s EMEA In-house Indirect Tax Leader of the Year award
Luxembourg’s reform agenda continues at pace in 2025, with targeted measures for start-ups and alternative investment funds
Veteran Elizabeth Arrendale will lead the new advisory practice, which will support clients with M&A tax structuring, post-deal integration, and more
MAP cases keep increasing, and cases closed aren’t keeping pace with the number started, the OECD’s Sriram Govind also told an ITR summit
Nobody likes paperwork or paying money, but the assertion that legal accreditation doesn’t offer value to firms and clients alike is false
Ryan hopes the buyout will help it expand into Asia and the Middle East; in other news, three German finance ministers have called for a suspension of pillar two
Gift this article