Indonesia has officially enacted Law Number 6 of 2026 on the Indonesian International Financial Center (Pusat Finansial Internasional Indonesia/PFII), establishing the legal framework for a special financial zone that offers various benefits to investors and business actors, including tax incentives.
Comprising 10 chapters and 73 articles, the law regulates zone establishment, business activities, institutional structures, dispute settlement, and special facilities to enhance Indonesia's competitiveness as an international financial hub.
One of the primary attractions offered under the regulation is tax incentives in the form of corporate income tax reductions of up to 100%, income tax facilities for financial sector experts, as well as relief on value added tax (VAT), luxury goods sales tax, and customs duties.
However, the government does not grant these facilities automatically to all investors. Incentive recipients must meet the categories and requirements set out in Chapter VIII of the PFII Law, specifically Articles 47 to 65.
Article 47 outlines several eligible groups entitled to tax facilities. These include business actors, financial sector experts of both Indonesian and foreign nationalities, subject to applicable provisions, ad hoc judges, foreign tax subjects investing in the PFII, and the PFII management board and the PFII financial services supervisory authority.
One of the main incentives is a corporate income tax reduction of up to 100% for business actors operating in the financial sector, financial supporting services, and other designated sectors within the PFII zone.
Similar facilities are granted to the LP PFII and LPJK PFII for their operational activities. However, the provision of corporate income tax reductions remains subject to international tax treaty provisions.
In addition, Article 50 governs the exemption from income tax on foreign-sourced income for eligible business actors and foreign financial experts working in the PFII.
The government also provides a final income tax facility at a 0% rate for a specified period. Under Article 52, this facility applies to financial sector experts working for financial business entities in the PFII and ad hoc judges who meet the stipulated requirements.
Furthermore, foreign nationals may be exempt from domestic tax resident status. Article 53 stipulates that this facility applies to foreign nationals registered with a family office in the PFII who hold a golden visa.
Recipients of this facility are also prohibited from earning income from active business activities or employment with entities either inside or outside the PFII while residing in Indonesia. The exemption from domestic tax resident status remains valid for as long as the golden visa is active.
Other facilities include withholding tax exemptions on specified investment income in the PFII for foreign tax subjects. This provision also extends to transactions involving the purchase of residential properties categorized as ultra-luxury by qualifying parties.
Tax Facility Provisions
Beyond income tax incentives, the PFII Law also provides indirect tax and customs facilities.
Articles 56 and 57 regulate non-collected VAT facilities on deliveries of certain strategic taxable goods and services. The regulation also governs exemptions from Luxury Goods Sales Tax for luxury residential properties under applicable provisions.
Meanwhile, Article 60 provides import duty exemptions on goods imported for the construction and development of the PFII zone.
The law also regulates tax treatment regarding inheritance. Based on Article 61, inheritance tax-related facilities can be granted subject to specified requirements being met, including provisions regarding inherited assets registered with a family office in the PFII.
Furthermore, Article 62 governs a 0% final income tax on grants intended for the initial capital funding of the LP PFII.
Despite offering a wide range of relief measures, the government still requires facility recipients to fulfill their tax and customs obligations. Article 63 regulates reporting obligations and tax/customs administrative compliance for taxpayers, business actors, experts, and other related parties.
If recipients no longer meet the requirements, the government may revoke the previously granted facilities. In fact, under Article 64, recipients may be required to repay the taxes or import duties for which facilities were previously granted, along with penalties under applicable provisions.
Apart from tax incentives, the PFII Law also provides an institutional and legal framework to support international financial activities.
The central government may establish more than one PFII zone through government regulations upon proposal by the Minister of Finance. The proposal must include the location, capital structure, and a feasibility study. The location of a PFII is also designated as separate from Special Economic Zones (SEZs).
Business activities in the zone encompass three categories: the financial sector, the financial supporting sector, and other sectors. The financial sector includes banking, insurance, Sharia finance, capital markets, pension funds, financing, financial technology (fintech), family offices, and investment management.
Meanwhile, the supporting sector includes public accounting, valuation, notary, legal consulting, financial consulting, and tax consulting services. Other sectors include transportation, accommodation, healthcare, tourism, and food and beverage.
In terms of institutional arrangements, the PFII Law regulates the establishment of the PFII governor, the PFII advisory council, the PFII council, the PFII management board, and the PFII financial services supervisory authority.
The PFII council is authorized to set strategic policies and supervise the zone management board. However, policies that impact state revenue, tax facilities, customs, and state finances must first be coordinated with the minister of finance.
To ensure legal certainty, the government has also established the PFII Arbitration Institution and the PFII Court as a specialized court within the general court system. The court is authorized to hear cases related to business activities, contracts executed within the PFII zone, and disputes arising from the provision of tax facilities.
The PFII Law also designates English as the official language used in operating the zone and allows the use of foreign currency in business activities. The Indonesian Rupiah may still be used for supporting operational transactions and daily activities.
The PFII Law was enacted on August 19, 2026, and took effect on the same date. Its implementing regulations must be issued no later than six months following enactment, namely February 19, 2027.
Also Read:
Jakarta and Bali Set as PFII Locations, Indonesia Eyes Financial Hub Status
Unpacking Tax Incentives Under the PFII Law and Their Impact
PFII Bill Passed, Government Prepares Tax Incentives to Attract Foreign Investment
Writer: Fiorentina Renata Trixie | Editor: Thomas Rizal
