The Indonesian Government and the House of Representatives passed Law Number 6 of 2026 concerning the Indonesia International Financial Center (Pusat Finansial Internasional Indonesia/PFII Law) on August 19, 2026. This law was published in the State Gazette of the Republic of Indonesia of 2026 Number 111 and has been in effect since its promulgation. The PFII Law consists of 73 articles divided into ten chapters, accompanied by a general and an article-by-article elucidation.
Chapter I regulates general provisions and principles (Articles 1 and 2). Chapter II governs the establishment, status, and objectives of the PFII (Articles 3 and 4). Chapter III regulates business activities, prohibitions, and administrative sanctions (Articles 5 to 9). Chapter IV regulates institutional arrangements, including the PFII Advisory Board, the PFII Board, the PFII Management Agency (Lembaga Pengelola PFII/LP PFII), and the PFII Financial Services Supervisory Agency (Lembaga Pengawas Jasa Keuangan PFII/LPJK PFII), along with their accountability (Articles 10 to 34). Chapter V regulates the PFII Arbitration Institution (Articles 35 to 37), while Chapter VI regulates the PFII Court (Articles 38 to 45). Chapter VII governs the support of the central and regional governments (Article 46). Chapter VIII regulates tax facilities and other special facilities (Articles 47 to 65). Chapter IX regulates PFII special provisions, such as the use of the English language, applicable laws, and foreign currencies (Articles 66 to 70). Chapter X contains concluding provisions (Articles 71 to 73).
Considerations
The PFII Law was established based on five main considerations. First, public welfare needs to be realized through sustainable economic growth, equitable development, employment expansion, as well as the deepening and diversification of the national economy through the financial sector. Second, an internationally competitive financial center with special authority is required. Third, such a financial center requires a special legal framework, independent financial regulations, credible dispute resolution, and legal certainty in civil and commercial transactions. Fourth, Article 248A paragraph (7) of Law Number 4 of 2026, which amends Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, mandates the regulation of the PFII through a law. Fifth, based on these considerations, it is necessary to enact the PFII Law. The ‘In view of’ section refers to Article 5 paragraph (1) and Article 20 of the 1945 Constitution of the Republic of Indonesia, as well as Law Number 4 of 2023 as amended by Law Number 4 of 2026.
Tax Implications
The PFII Law also regulates tax facilities. Article 47 stipulates five groups of facility recipients, namely business actors conducting activities as referred to in Article 5 paragraph (1), foreign and Indonesian financial sector experts who meet the criteria, foreign ad hoc judges, non-resident tax subjects investing in the PFII, as well as LP PFII and LPJK PFII.
Article 48 categorizes the facilities into income tax, value added tax (VAT) and/or luxury goods sales tax, and customs facilities. Income tax facilities only apply to income derived from the PFII and for recipients who meet certain qualifications. According to the elucidation of Article 55, these qualifications include, among others, the number of employees, investment value, and minimum annual expenditure. The PFII must also not be located within a Special Economic Zone (SEZ) as stipulated in Article 3 paragraph (5), so that PFII facilities do not overlap with SEZ facilities.
For income tax, Article 49 provides five forms of facilities: exemption of income tax on income from outside Indonesia, corporate income tax reduction, 0% final income tax, exemption as a domestic tax subject, and exemption from income tax withholding and/or collection.
Article 48 paragraph (2) grants income tax facilities for 50 years for financial sector business activities and investments by non-resident tax subjects. Meanwhile, supporting activities, other sectors, the LP PFII, and the LPJK PFII receive a shorter period, which will be stipulated in a ministerial regulation.
Article 50 exempts income from outside Indonesia for business actors and foreign experts. The article states that this facility represents a transition from a worldwide income system to a territorial income system. A 100% corporate income tax reduction is granted to business actors, as well as the LP PFII and the LPJK PFII, for their operational activities (Article 51). Meanwhile, financial sector experts and ad hoc judges are subject to a 0% final income tax for a certain period (Article 52).
Article 53 provides an exemption from being a domestic tax subject for foreign nationals who are registered with a family office in the PFII, obtain a golden visa, and do not receive income from active business activities or work for a business actor, either within the PFII or in other parts of Indonesia. The facility is valid as long as the golden visa remains valid and is targeted at foreign Ultra High Net Worth Individuals.
Article 61 regulates that inheritance tax is not applicable in the PFII, provided that the assets are registered with a family office and the testator is a foreign national registered with the said family office.
For non-resident tax subjects, Article 54 exempts the withholding and/or collection of income tax on investment income in the PFII. According to the elucidation, this income includes interest, dividends, discounts, gains from the transfer of assets, and the distribution of profits of a permanent establishment. A similar exemption applies to the purchase of extremely luxurious residences in the PFII. Article 62 also regulates a 0% final income tax on grants for the initial capital of the LP PFII, with the tax base being the fiscal book value of the party transferring the assets.
Regarding VAT and customs, Articles 56 to 59 provide facilities for non-colldected VAT and exemptions from luxury goods sales tax. VAT is not collected on the delivery of certain strategic taxable goods and services, as well as the import of capital goods for the construction and development of the PFII.
Strategic goods include new buildings in the form of landed houses, apartments, offices, shops or shopping centers, and warehouses. Strategic services include the leasing of such buildings as well as infrastructure construction services, such as roads, bridges, new and renewable energy power plants, hospitals, schools, and government buildings. The PFII Board may propose other types to the Minister. Luxury goods sales tax is exempted for luxury residences. Article 60 exempts import duties on goods imported according to a list determined by the PFII Board.
Because the non-collected VAT mechanism is used, the treatment of input tax and the procedures for issuing tax invoices still require further stipulation in a ministerial regulation.
PFII facilities remain subject to international taxation provisions. Article 51 paragraph (3) states that the corporate income tax reduction must take into account international agreements or treaties in the field of taxation. The elucidation mentions that business actors in the PFII whose effective tax rate drops below 15% due to the facilities remain subject to an additional tax to reach 15% based on the qualified domestic minimum top-up tax (QDMTT), income inclusion rule (IIR), and/or undertaxed profit rule (UTPR).
For multinational groups with a gross group turnover of more than EUR 750 million, the corporate income tax reduction facility essentially shifts tax revenues to a domestic top-up tax mechanism or other jurisdictions. Obligations as a GloBE taxpayer remain applicable, including the filing of GloBE Tax Returns based on PER-6/PJ/2026. Consequently, PFII facilities are more valuable for business actors below the GloBE threshold, family offices, and individuals.
In terms of compliance, Article 63 requires business actors, experts, and other parties in the PFII to possess a Taxpayer Identification Number (nomor pokok wajib pajak/NPWP), maintain bookkeeping, withhold and/or collect taxes, file tax returns and report the utilization of the facilities.
Recipients who fail to meet the requirements may be subject to the revocation of facilities and/or the obligation to return the utilized facilities, accompanied by sanctions in accordance with the General Provisions on Taxation (Article 64).
Article 69 paragraph (1) mandates the use of foreign currencies in business activities within the PFII. Therefore, business actors need to prepare accounting and reporting in foreign currencies. Article 69 paragraph (4) and Article 31 paragraph (5) also emphasize that activities in the PFII are subject to the provisions on anti-money laundering, transparency of beneficial owners, as well as access to financial information for tax purposes and the exchange of information based on international agreements. Thus, the PFII facilities do not eliminate the transparency obligations, including for family offices.
Several matters still require clarification. Article 39 paragraph (1) letter c grants exclusive authority to the PFII Court to handle cases arising from the provision of tax facilities in the PFII. However, the relationship of such authority with the Tax Court has not yet been clarified.
Article 17 requires the PFII Board to coordinate with the Minister prior to enacting policies that impact state revenues, tax and customs facilities, and the implementation of international tax agreements.
The PFII Board, LP PFII, and LPJK PFII are also authorized to collect levies, fees, and dues, the regulations for which will be stipulated through PFII board regulations. The tax treatment of these levies still needs to be clarified.
Article 72 mandates that the implementing regulations be enacted no later than six months after the PFII Law is promulgated, or around February 2027. While awaiting these regulations, investors and family offices need to map out the structures, tax residency statuses, and facility requirements that must be fulfilled.
To understand and optimize the utilization of the PFII tax facilities, you may consult with the Ideatax team.
Legal References
- Law Number 6 of 2026 concerning the Indonesia International Financial Center.
- Law Number 4 of 2026 concerning the Amendment to Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector.
- Director General of Taxes Regulation Number PER-6/PJ/2026 concerning Procedures for Exercising Global Minimum Tax Rights and Obligations Under International Agreements.
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 Law Regulates Up to 100% Corporate Income Tax Incentives for Investors
Writer: Ideatax | Editor: Thomas Rizal