Indonesia is considering a sweeping tax package to power its planned international financial centre, offering incentives generous enough to bring the effective income tax rate down to zero for select businesses and foreign finance professionals.
Lawmakers, along with legal and economic experts, discussed the draft legislation at a public hearing this week. Under the proposal, companies setting up shop in the new financial zone could receive a full, 100 per cent reduction in corporate income tax. Foreign specialists working in the finance sector would also be spared income tax entirely, a move clearly aimed at pulling in global talent alongside capital. Similar to what nations like UAE, Singapore and Monaco do.Â
The plan doesn’t stop at corporate tax breaks. Reports suggest holders of “Golden Visas” tied to the zone may avoid being classified as domestic tax residents altogether, while overseas investors earning dividends or other investment income through the hub could see preferential treatment as well.
The push fits into Jakarta’s broader ambition of positioning itself as a serious contender among Asia’s financial centres, competing for the kind of capital, expertise, and institutional presence that currently gravitates toward hubs like Singapore. Officials, including senior figures in the national economic leadership, have argued that building out family offices and a dedicated financial district would boost investor confidence and offer the legal certainty many global investors look for before committing funds.
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Still, the timing is notable. With the OECD’s global minimum tax rules now taking effect worldwide, aggressive tax breaks aimed at multinational companies risk simply shifting revenue to other governments rather than genuinely benefiting investors — a tension Indonesia’s policymakers will need to navigate as the bill moves forward.
