Regional News
Major foreign investors in Indonesia will be granted tax holidays in a bid to attract more direct investment into Southeast Asia’s largest economy.
Sectors including base metals, oil refining, petrochemicals and renewable energy will qualify for the exemption, providing companies invest at least £71 million.
The tax holiday will exempt investors from paying taxes for between five and ten years from the moment the business starts operating.
Exemptions will also be offered retrospectively to businesses yet to make a profit and established up to a year before the announcement.
It is hoped that the tax holiday will support the manufacturing and infrastructure projects that feature as part of the government’s Masterplan for the Acceleration and Expansion of Economic Development of Indonesia, announced by President Susilo Bambang Yudhoyono.
Finance minister Agus Martowardojo was reported as saying: “These companies must have at least Rp 1 trillion (£71 million) in investment and be considered pioneers in their industries.”
Applications for a tax holiday should be made to Indonesia’s ministry of industry, where it will be assessed in view of the criteria.
Indonesia already offers companies generous tax incentives, although these companies will not be eligible for the new tax holiday exemption.
Banking dynasty scion Nat Rothschild, the British financier, struck a £1.9 billion deal late last year that saw his mining investment Vallar acquire stakes in two Indonesian coal mining companies.
Critics worry that short term incentives may, however, become long term problems if the Indonesian government is unable to withdraw them for fear of losing investment.
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By: Sean O’Hare
Source: The Telegraph, Aug. 16, 2011
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