Assessing the Effectiveness of Tax Facilities for National Strategic Projects

The government has determined 14 national strategic projects for 2024, which are mentioned in the Medium-Term Development Plan 2024–2029. In general, the national strategic projects are spread throughout Indonesia and include infrastructure projects that carry a high investment value and have a broad impact on the economy, such as the development of road infrastructure, ports, airports, dams, and more.

Cumulatively, from 2016 to February 2024, the government has completed 195 National Strategic Projects with a capitalization value of more than 1,519 trillion rupiah. Currently, 77 national strategic projects are still under construction with a capitalization value of 2,960 trillion rupiah (Detik, 2024).
The 14 national strategic projects include the following projects (CNBC, 2024):

 

1. Integrated Area Development in Bumi Serpong Damai (BSD)
2. Patimban Industrial Estate, Subang
3. North Hub Development Project Offshore, East Kalimantan
4. Neo Energy Parimo Industrial Estate Development, Central Sulawesi
5. Development of Wiraraja Industrial Estate, Galang Island
6. Development of Giga Industrial Park, Southeast Sulawesi
7. Development of Kolaka Resource Industrial Park, Southeast Sulawesi
8. Development of Stargate Astra Industrial Park, Southeast Sulawesi
9. Development of the Surabaya Water Front Coastal Area
10. Development of Neo-Energy Morowali Area, Central Sulawesi
11. Development of the Pantai Indah Kapuk Tropical Concept
12. Development of Toapaya Industrial Estate, Bintan, Riau
13. Toll Road Development at Section Harbour Road II, North Jakarta
14. Development of Toll Roads within Bandung City

 

For information, national strategic projects are projects implemented by the government, regional governments, and/or business entities that have a strategic nature to increase growth and equitable development to improve community welfare and regional development.

There are several facilities provided by the government for national strategic projects, including ease of licensing, ease of taxation, adjustment with spatial plans, provisions of land by the central and regional governments, prioritizing the use of domestic components, and providing government guarantees for national strategic projects.

 

In addition, in national strategic projects, ministers, heads of state, governors, regents, and mayors who handle national strategic projects can exercise discretion if there are obstacles and problems faced. This is as stipulated in Presidential Regulation No. 3 of 2016 concerning the Acceleration of the Implementation of National Strategic Projects.

 

Regarding taxation convenience, the government regulates that taxpayers who are assigned to carry out national strategic projects can apply for a reduction in corporate income tax and are given certain treatment as long as they fulfill the provisions as stipulated in the Minister of Finance Regulation number 130 of 2020 concerning the Provision of Corporate Income Tax Reduction Facilities.

 

The government regulates that for taxpayers who invest at least 500 billion rupiah, a 100% reduction in Corporate Income Tax is given. Meanwhile, for taxpayers who make investments between 100 billion and 500 billion, a reduction in Corporate Income Tax of 50% of the amount of Corporate Income Tax payable is given.

 

 

Regarding the period of corporate income tax reduction, the government regulates that for taxpayers who have investment plans between 500 billion and 30 trillion rupiahs, a reduction in the period of corporate income tax reduction is given between five years and twenty years with the following details:

 

        

Apart from being given a reduction in corporate income tax within a certain period, several specific tax treatments given by the government to taxpayers assigned to carry out national strategic projects, including the following:

 

First, taxpayers who are assigned to carry out national strategic projects can apply for an income tax reduction even though they have not carried out commercial production. This treatment is different from the application for a reduction in corporate income tax for other taxpayers, who must carry out commercial production first before applying for an income tax reduction. Furthermore, the provisions of PMK 130 of 2020 stipulate that the application for a reduction in corporate income tax can be submitted when the taxpayer applies for a taxpayer identification number.

 

Secondly, taxpayers who receive assignments can start utilizing the corporate income tax deduction as long as they have carried out commercial production and have realized the entire investment plan.

 

However, it should be noted that most of the national strategic projects are infrastructure projects that are subject to Income Tax Article 4(2) on construction services. Thus, even though the government provides a reduction in corporate income tax for taxpayers who are given assignments for national strategic projects, it is likely that the incentive will not be very effective. Thus, if the government wants to maintain the sustainability of national strategic projects, it needs to consider options to provide tax incentives in the form of a reduction in Final Income Tax Article 4(2).