Provisions for Open and Closed Business Sectors based on Presidential Regulation Number 10 of 2021 concerning Investment Business Fields

Priority Business Fields are Business Fields that meet the criteria, namely: national strategic programs / projects, capital intensive, labor intensive, high technology, pioneer industry, export orientation; and / or, orientation in research, development and innovation activities. Investors investing in the priority business sector will be given fiscal incentives and / or non-fiscal incentives.

Fiscal incentives consist of: First, tax incentives covering income tax for investment in certain business fields and / or in certain areas (tax allowance). Second, reduction of corporate income tax (tax holiday). Third, reduction of corporate income tax and net income reduction facilities for investment as well as reduction in gross income for certain activities (investment allowance), including: a) reduction in net income from new investment or business expansion in certain business fields which are dense industries. creation; and / or b) reduction of gross income for implementing work practice activities, apprenticeship and / or learning in the framework of fostering and developing certain competency-based human resources.

In addition to fiscal incentives in taxation, there is also fiscal incentives in customs in the form of exemption from import duties on imported machinery and goods and materials for industrial development or development in the context of capital investment.

Then for non-fiscal incentives include ease of business licensing, provision of supporting infrastructure, guaranteed energy availability, guaranteed availability of raw materials, immigration, employment, and other conveniences.

The business fields allocated for cooperatives and Micro, small, and medium enterprises (UMKM) are determined based on the following criteria:

a. business activities that do not use technology or that use simple technology;

b. business activities that have a specific process, are labor intensive, and have a cultural heritage that is special and hereditary and / or

c. The capital for the business activity does not exceed Rp.10,000,000,000.00 (ten billion rupiah) excluding the value of land and buildings.

Business Fields with Certain Requirements must meet the following requirements:

a. Investment Requirements for Domestic Investors;

b. Investment requirements with restrictions on foreign capital ownership; or

c. Investment requirements with special license.

Foreign investors can only carry out business activities in large enterprises with an investment value of more than Rp. 10,000,000,000.00 (ten billion rupiah) excluding the value of land and buildings.

Foreign investment must be in the form of a limited liability company based on Indonesian law and domiciled in the territory of the Republic of Indonesia, unless stipulated otherwise by law.

The provisions on business fields with certain conditions do not apply to investment activities carried out in special economic zones.

In order to encourage the strengthening of the technology-based startup ecosystem, which is not only limited to the aspects of funding, infrastructure, mentor networks, technology transfer, and market access, foreign investment in special economic areas in technology-based startups can make investments with the same investment value. with or less than Rp.10,000,000,000.00 (ten billion rupiah) excluding the value of land and buildings.

Suria Nataadmadja & Associates Law Firm

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