Indonesia plans Rp632 trillion in tax incentives for 2027
Finance Minister Suahasil Nazara estimates the incentives will equal 2.26 per cent of GDP, with manufacturing, agriculture and trade expected to be major users.
Indonesia plans to provide Rp632 trillion in tax incentives in 2027, Finance Minister Suahasil Nazara said. The amount is estimated to represent 2.26 per cent of the country’s gross domestic product.
Speaking at KADIN’s national leadership meeting at Hotel Borobudur in Jakarta, Suahasil said the measures would support households, micro, small and medium-sized enterprises, businesses and investment. He said they were intended to maintain purchasing power, sustain growth and support competitiveness.
The relief involves the government forgoing tax collection or granting exemptions. Suahasil expects manufacturing, agriculture and trade to account for much of the incentives used in 2027, consistent with the estimated distribution for 2026.
For 2026, he put estimated tax incentive expenditure at Rp576.4 trillion, or 2.24 per cent of GDP. Manufacturing received the largest allocation of tax relief, at Rp137.2 trillion, followed by agriculture at Rp60.5 trillion and trade at Rp55.3 trillion.
Measures provided during 2026 included tax holidays for pioneering manufacturing industries, the 11/12 effective VAT facility and income tax exemptions on dividends. Other examples were the non-imposition of VAT on public transport services and final income tax provisions for land and building transfers and construction services. Suahasil said tax support was tailored to each sector’s characteristics, particularly to strengthen productivity and business competitiveness.
