New Investment to Gain Attractive Tax Incentives
Thursday, 04 January, 2007 | 14:57 WIB

Tempo Interactive, Jakarta: The government is offering tax incentives for new investment that will be far more attractive than tax holidays.

There are 15 specific business sectors as well as nine business sectors in certain regions that will be granted the incentives.

“We will give the facilities to either foreign or domestic investors,” said Darmin Nasution, Director General of Taxes at the Department of Finance, during the socializing of Governmental Regulation Number 1/2007 concerning Income Tax for Capital Investment in Specific Sectors and/or in Specific Regions yesterday (01/03) in Jakarta.

According to Darmin, the incentives offer facilities for investors who invest new capital or expand their businesses.

The facilities include alleviating net income at 30 percent of the amount of capital investment in six years, or five percent per year.

In addition, reduction and amortization facilities will be accelerated as regards fixed assets that a company buys.

Also, income tax on dividends paid to foreign tax subjects is lower at 10 percent and loss compensation is more than five but less than ten years.

Darmin explained that new investments are not directly granted incentives.

The reason is that there must be a recommendation from Capital Market Coordinating Board and verification process from the Department of Finance before Finance Ministerial Decree stipulates the facilities.

After tax payers are given the facilities, Darmin went on to say, they will be prohibited from using company's fixes assets for other purposes.

“Should they violate this, their facilities will be revoked immediately,” he said.

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