The international financial centre for which Indonesia has cut taxes to zero for foreign businesses will not begin operations in Bali.
Parliament passed the law establishing it on July 21, and three days later the government announced that its first location would be the Danareksa Tower in central Jakarta. The new building was completed in 2022 and can be adapted to the centre’s needs faster than any other option. The centre will move to the special zone being prepared for Bali in about three years, which is how long it will take to prepare the site.
The exact site has yet to be decided. The president will approve the location through a separate decree based on a proposal from the Ministry of Finance. Three options are being considered in Bali: North Bali, Kura Kura Bali in Serangan, and Sanur.
Two of them pose a problem: the law prohibits the centre from being located within a special economic zone, while Kura Kura and Sanur both have that status. The Ministry of Finance does not see this as an obstacle and says the zones’ status could be changed.
The authorities aim to redirect money currently flowing to Singapore and Hong Kong and attract major banks, investment funds, and family offices to Indonesia. To achieve this, companies in the centre are being offered a 0% corporate income tax rate for up to 50 years.
Foreign financial-sector professionals will be exempt from personal income tax, holders of golden visas linked to the centre will no longer be considered Indonesian tax residents, and dividends and other income earned by foreign investors will be exempt from withholding tax. VAT, luxury goods tax, and import duties will also be abolished.
Even before the vote, the tax authority clarified that half a century was the maximum term, not a general rule. The duration and scale of the incentives, as well as eligibility criteria, will be determined by a future Ministry of Finance regulation. Major international companies subject to the global minimum tax will not qualify for the zero rate at all.
Companies in the centre will be prohibited from operating in the Indonesian market. They will not be allowed to raise funds from Indonesian residents outside the zone or serve local retail clients. The only exception will be funds originating within the centre itself.
This condition was introduced to ensure that the centre handles international financial flows and does not take clients away from Indonesian banks. Nothing will change for companies outside the centre: they will prepare their financial reports and calculate taxes under the standard rules, with accounting support available to help them.
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