In 2025, Indonesia is aligning tax policy with strategic economic goals, offering robust tax incentives across selected sectors to attract foreign investment, boost domestic productivity, and navigate the fiscal challenges posed by a VAT increase to 12%. These incentives are not only financial stimuli—they are tools for long-term transformation.
Also read: Why Indonesia Remains an Attractive Foreign Investment Destination in 2025
Strategic Sectors Targeted for 2025 Tax Incentives
Manufacturing
A cornerstone of Indonesia’s industrial base, the manufacturing sector—especially small-scale and labor-intensive producers—is a prime beneficiary. Focus industries include:
- Textiles and footwear
- Furniture
- Processed food
- Automotive components
Key Benefits:
- Income tax relief for employees (PPh 21)
- Import duty exemptions on capital goods
- Preferential credit facilities (Rp20 trillion allocation)
Also read: Indonesia Manufacturing Industry: Outlook and Opportunities
Agriculture, Forestry & Plantation
Essential for ensuring food supply and supporting rural development, this sector receives incentives aimed at boosting modernization and enhancing global market competitiveness.
Key Benefits:
- Tax relief for sustainable farming tech
- VAT exemptions on equipment
- Subsidized financing for smallholder integration
Also read: Indonesia Agriculture Industry: Outlook and Potential
Financial Services & Insurance
To deepen financial inclusion and expand risk instruments for development sectors.
Key Benefits:
- Enhanced capital allowances
- Incentives for fintech innovation
- R&D tax benefits for insurtech platforms
Also read: Insurance Industry in Indonesia: Opportunities and Outlook
Transportation & Logistics
Indonesia’s archipelagic nature makes logistics a national priority. Tax incentives aim to reduce high distribution costs.
Key Benefits:
- Tax allowance for fleet and warehousing upgrades
- Import duty exemption for logistics infrastructure
- Incentives for green logistics systems
Education Services
A strategic push toward human capital development and knowledge economy transition.
Key Benefits:
- Tax deductions for training programs
- Super deductions for partnerships with local universities
- Reduced tax rates for vocational institutions
Green & Renewable Energy
While not always separately itemized in budget data, green projects (solar, hydro, waste-to-energy) are granted top-tier incentives.
Key Benefits:
- Tax holiday up to 15 years for >Rp5T investments
- Carbon market participation incentives
- Super deductions for R&D and tech transfer
Digital Economy & EV Ecosystem
Indonesia aims to lead Southeast Asia in digital infrastructure and EV production.
Key Benefits:
- 0% corporate tax for 5 years for data centers (>Rp1T)
- Tax breaks for BEV battery supply chains
- Exemptions from investment floor limits for tech startups in SEZs
Also read: Major Industries in Indonesia (Based on Contribution to GDP)
What Benefits Are Offered?
Tax Holiday (Up to 20 Years)
- Full exemption on corporate income tax
- Applies to pioneer sectors like green energy, EVs, and AI
- Based on investment size (min. Rp500 billion)
Also read; Tax Holiday in Indonesia: A Comprehensive Guide for Foreign Investors
Tax Allowance
- 30% tax deduction over six years
- Accelerated depreciation and loss carry forward
- Dividend tax reduction to 10%
Also read: Tax Allowance in Indonesia: A Key Investment Incentive
Super Deduction
- 300% for R&D
- 200% for vocational training
- Especially relevant for green tech and AI sectors
Import & VAT Exemptions
- Capital goods and raw materials for production
- Especially for businesses in Free Trade Zones or KEKs
Also read: Tax Incentives in Indonesia: Key Benefits and Opportunities
How to Qualify for These Incentives
General Requirements
- Operate in priority/pioneer sectors (as defined by BKPM and MoF)
- Must satisfy the minimum required investment value, typically ranging from Rp100 to Rp500 billion.
- Register as a legal Indonesian entity
- Apply via the Online Single Submission (OSS) system
Also read; How to Apply for Indonesia Investment Incentives via OSS
Documentation Checklist
- Business plan and financial forecast
- Company deed and tax ID (NPWP)
- Industry feasibility report (for pioneer sector verification)
- Proof of equity and debt structure
- Realization reports post-approval
Special Zones (KEK & IKN)
Companies in designated zones enjoy:
- Additional tax holidays (10–20 years)
- Extended land usage rights (up to 95 years)
- Customs and VAT exemptions
- Full foreign ownership (in select sectors)
Also read: How Foreign Investors Can Apply for Tax Allowance Incentives in Indonesia
Indonesia’s tax incentive strategy for 2025 is a blueprint for sector-led growth. By prioritizing manufacturing, renewable energy, digital economy, EV, and logistics, the government is stimulating investment where it matters most. Through a well-designed combination of fiscal relief, regulatory facilitation, and strategic zoning, investors gain a competitive edge—while Indonesia accelerates toward sustainable and inclusive development.
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Frequently Asked Questions (FAQs)
Which sectors qualify for the longest tax holiday?
Pioneer sectors like green energy, digital infrastructure, and EVs—especially for investments exceeding Rp30 trillion.
How do I apply for a tax incentive in Indonesia?
Register your business through the OSS system, submit detailed investment plans, and undergo BKPM and MoF evaluation.
Is there a tax benefit for R&D or vocational training?
Yes. Super deductions up to 300% for R&D and 200% for certified vocational training programs. Read the full guide her: Understanding Indonesia’s Super Deduction Tax for R&D and Training
What’s the benefit of investing in IKN or KEKs?
Enhanced incentives including extended tax holidays, land rights, and reduced regulatory barriers.
