There has been some expectation that the Government would amend Regulation No. 1 of 2007 on Capital Investment and Income Tax Facilities for Specific Industries and Specific Regions as a means of attracting capital investments into other sectors and regions. The amendments, as contained in Regulation No. 62 of 2008, increase the number of business sectors from 15 to 23 business sectors and from 9 to 15 business sectors in the specific regions.
The basic income tax facilities provided are:
1.
A net income reduction of 30% of the capital investment over a six-year period where the reduction is 5% for each year;
2.
Expedited depreciation and amortization;
3.
A flat income tax on dividends of 10% for foreign taxpayers; and
4.
The period of compensation for losses will be increased from five years but it will not exceed ten years.
All of the sectors and regions are noted in the Attachments to the Regulation.
For the businesses in the cement sector that have been actively participating in the reconstruction of Nanggroe Aceh Darussalam since the tsunami will also be able to benefit from these capital investment income tax facilities. The facilities that may be enjoyed by these businesses apply retrospectively to 1 January 2005.
The Regulation will be reviewed every two years by a team to be established and appointed by the Coordinating Minister of Economic Affairs.
The Regulation has been in force since 23 September 2008.
There has been some expectation that the Government would amend Regulation No. 1 of 2007 on Capital Investment and Income Tax Facilities for Specific Industries and Specific Regions as a means of attracting capital investments into other sectors and regions. The amendments, as contained in Regulation No. 62 of 2008, increase the number of business sectors from 15 to 23 business sectors and from 9 to 15 business sectors in the specific regions.
The basic income tax facilities provided are:
1.
A net income reduction of 30% of the capital investment over a six-year period where the reduction is 5% for each year;
2.
Expedited depreciation and amortization;
3.
A flat income tax on dividends of 10% for foreign taxpayers; and
4.
The period of compensation for losses will be increased from five years but it will not exceed ten years.
All of the sectors and regions are noted in the Attachments to the Regulation.
For the businesses in the cement sector that have been actively participating in the reconstruction of Nanggroe Aceh Darussalam since the tsunami will also be able to benefit from these capital investment income tax facilities. The facilities that may be enjoyed by these businesses apply retrospectively to 1 January 2005.
The Regulation will be reviewed every two years by a team to be established and appointed by the Coordinating Minister of Economic Affairs.
The Regulation has been in force since 23 September 2008.
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