Indonesian Government Plans to Cut Corporate Tax Rate

Feb 2020

The Indonesian government is to create an omnibus law that would help to improve Indonesia’s attractiveness to investors. The President has asked lawmakers to complete deliberations on the bill within 100 days. Part of the bill proposes corporate tax cuts and higher taxes on internet giants. Another portion of the bill aims to streamline bureaucracy and relax labor rules.

Although the bill was not made available publicly, but the Finance Minister Sri Mulyani Indrawati has previously said the bill would propose a reduction in the corporate tax rate from the current 25% to 22% in 2021 and further down to 20% in 2023. As for the internet companies, the Indonesian government plans to add 10% value added tax (VAT), regardless of where they are based.

Indonesia is estimated to lose USD 6.27 billion from a year in the corporate tax reduction.

(Source: Reuters)