Indonesia’s parliament passed a law on 21 July 2026 establishing the Indonesia International Financial Centre (PFII), a special jurisdiction offering some of the country’s most extensive tax incentives to date. The government estimates the initiative could draw IDR 300 trillion to 500 trillion in investment and position Indonesia as a wealth management and financial services hub. This new law brings substantial tax incentives and exemptions within reach to businesses, alongside regulatory gaps that still need to close before they can act.
Tax incentives and exemptions for businesses and investors
Eligible businesses operating within the PFII zone will receive a 100% reduction in corporate income tax for a specified period. Foreign financial sector professionals working within the zone will also receive a full personal income tax exemption, a measure intended to help Indonesia draw global talent alongside capital, following a model used by hubs such as Singapore, the United Arab Emirates and Monaco.
The law also provides exemptions from tax on overseas income, VAT, luxury goods tax and import duties for qualifying activities within the zone. Foreigners holding Golden Visas tied to the zone may avoid being treated as Indonesian tax residents, if their visa remains valid and they reside within the designated area. This provision ties the tax benefit directly to physical presence in the zone, a detail businesses should note when assessing eligibility for staff or investors.
Governance, dispute resolution and funding
A dedicated management body will oversee the PFII, supported by an advisory council and a separate financial supervisory body. Initial capital for the management body may come from cash, state assets, business entities, Indonesia’s sovereign wealth fund Danantara or other lawful sources. The PFII will also include a specialised arbitration body and a dedicated court to handle commercial disputes, contracts and tax related cases within the zone, aiming to give international investors greater legal certainty.
The government has not yet confirmed the final location of the financial centre, though Bali has been widely reported as the intended site because of its international connectivity and appeal to foreign residents.
Preparing for the new tax landscape
Several details remain outstanding. The implementing regulations, which will set out eligibility criteria, specific incentive thresholds and operational rules for the zone, have not yet been issued. Businesses considering a presence in the PFII should watch closely for their release, as these will determine which sectors and structures qualify for the incentives.
In the meantime, companies with existing Indonesian operations should review how the new framework may affect cross border financing, staff placements or investment structures involving the zone. Seeking advice early can help businesses position themselves to take advantage of the incentives once the detailed rules are confirmed.
