All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Indonesia: Analysing facilities in the special economic zones


Freddy Karyadi

Chaterine Tanuwijaya

To boost investments to Indonesia, support economic development and increase employment in the special economic zones (SEZs), Indonesia issued Government Regulation No 96 of 2016 (GR 96/2016) on December 28 2015 on 'Facilities in the Special Economic Zones', effective as of January 25 2016.

The facilities given are: tax, customs and duty; traffic of goods; employment; immigration; land; and license and non-license. The main business activities eligible for the SEZ facilities will be determined by the National Council of Special Economic Zones. There are eight SEZs at present: (1) Mangkei, North Sumatera (2) Tanjung Api-Api, South Sumatera, (3) Tanjung Lesung, Banten, (4) Mandalika, West Sumba, (5) MBTK, East Kalimantan, (6) Palu, Central Sulawesi (7) Bitung, North Sulawesi and (8) Morotai, North Maluku. GR 96/2016 refers to two types of entities: (1) 'business entity', being a company with legal entity, which may be a state-owned enterprise, or regional-owned enterprise, cooperative, private, and joint venture to carry out activities in the SEZs; and (2) 'business', being companies with legal entity or non-legal entity, or individuals doing business inside the SEZs (see Table 1).

Table 1


Treatment in the Special Economic Zones

Tax allowance

Given to companies and individuals in the SEZs

VAT and VAT on luxury goods

Not imposed for certain taxable goods

Import duty

Duty postponed for import to SEZs


Not imposed for raw materials and supporting goods for production purposes

Tax on import

Not imposed

Land tax

Deductible in accordance with the prevailing laws

Tax, customs and duty facilities

To obtain the facilities, the business entities must: (a) be granted (by the government) a status as 'business entity' to develop and/or manage the SEZ from the regional government or regency/city or Ministry/non-Ministry government institutions as authorised, in the form of a government regulation; (b) have a development and/or management of SEZs agreement with the regional government or regency/city or Ministry/government institutions as authorised; and (c) have made a certain limit of area of the SEZs.

To obtain the facilities, the business should be: (a) a resident corporate taxpayer and (b) have obtained Principle License of Investment from the Special Economic Zones Administrator. To be eligible for customs and duty, the business entity should have a system operation connected to the Directorate General of Customs and Duty.

To enjoy corporate income tax reduction, the business entity must be a new investment with new investment plan, and the line of business is in the production chain of 'main activities in the Special Economic Zones', and located at the SEZs. The facility will be given from the year commercial production commences and has realised its investment. 'Main activities' in the SEZs will be determined by the National Council for Special Economic Zones (see Table 2).

Table 2

Investment value

Period of facility

Income tax reduction

more than Rp1,000,000,000,000,- (1 trillion Rupiah)

at least 10 years to a maximum of 25 years

20% - 100%

Rp.500,000,000,- (500 billion Rupiah) up to Rp1,000,000,000,000,- (1 trillion Rupiah)

at least five years to a maximum of 15 years

20% - 100%

less than Rp.500,000,000,- (500 billion Rupiah)

at least five years to a maximum of 15 years

Determined by the relevant ministry

It is hoped that these facilities and other measures will accelerate national economic development as a whole, and maximise industrial activities, export, import and other economic activities with high economic value.

Freddy Karyadi ( and Chaterine Tanuwijaya (

Ali Budiardjo, Nugroho, Reksodiputro, Counsellors at Law

Tel: +62 21 250 5125


more across site & bottom lb ros

More from across our site

The UN’s decision to seek a leadership role in global tax policy could be a crucial turning point but won’t be the end of the OECD, say tax experts.
The UN may be set to assume a global role in tax policy that would rival the OECD, while automakers lobby the US to change its tax rules on Chinese materials.
Companies including Valentino and EveryMatrix say the early adoption of EU public CbCR rules could boost transparency of local and foreign MNEs, despite the short notice.
ITR invites tax firms, in-house teams, and tax professionals to make submissions for the 2023 ITR Tax Awards in Asia-Pacific, Europe Middle East & Africa, and the Americas.
Tax authorities and customs are failing multinationals by creating uncertainty with contradictory assessment and guidance, say in-house tax directors.
The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.
An OECD report reveals multinationals have continued to shift profits to low-tax jurisdictions, reinforcing the case for strong multilateral action in response.
The UK government announced plans to increase taxes on oil and gas profits, while the Irish government considers its next move on tax reform.
War and COVID have highlighted companies’ unpreparedness to deal with sudden geo-political changes, say TP specialists.
A source who has seen the draft law said it brings clarity on intangibles and other areas of TP including tax planning.