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

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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


Siti Ni'mah Fitriah

Manager, GNV Consulting Services


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