Finance Ministry decides not to extend tax holiday scheme
Published · Updated
What happened
The Finance Ministry decided not to extend Indonesia's tax holiday scheme. The reported reason was that the scheme does not meet OECD qualification criteria for tax incentives.
Why it matters
The decision changes the terms under which Indonesia promotes new investment and may alter project economics for firms that expected the incentive to continue. It also aligns tax policy more closely with OECD-related standards, with implications for revenue collection and Indonesia's position in global tax-rule discussions.
Indonesia's Finance Ministry was reported on 4 November 2026 to have decided not to extend the country's tax holiday scheme, citing misalignment with OECD qualification criteria for tax incentives. The move marks a concrete shift in fiscal and investment policy, as Jakarta weighs investment attraction tools against international tax-rule compliance. The near-term policy question is whether the government replaces the expiring incentive with narrower, OECD-compatible instruments or accepts a tighter incentive regime.
Watch for
Ministry of Finance publication or press release on 2027 tax incentive policy after 2026-11-05 BKPM/Investment Ministry guidance to investors on replacement facilities or grandfathering terms by 2026-11-08 Directorate General of Taxes clarification on existing tax holiday approvals and transition treatment for pending applications by 2026-11-08 Coordinating Ministry for Economic Affairs statement on alternative OECD-compatible incentives for priority sectors after 2026-11-05
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