In an attempt to win over more investors, the Ministry of Finance announced plans to reduce the corporate income tax rate from 25% to 17.5%; a figure nearing that of Singapore. Indonesia’s corporate income tax is slightly higher than its regional neighbours which can deter investors and often leads to the establishment of holding companies based out of Singapore thereby subjecting dividends to a more preferable taxation rate. Indonesia’s corporate income tax rate has been a particularly decisive factor for investors in the manufacturing sector where Indonesia faces stiff competition from markets such as Thailand and Vietnam. Key advisor to the President, Mr Luhut Panjaitan, has pledged to investors that the proposed plan will go through this year though there is no confirmation on the set time period.
Indonesia Corporate Tax | GBG
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