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Indonesia has released the specifics of its investment law overhaul, with changes that include lower taxes on bond earnings and new permit requirements for plantations.
 
The 49 implementing rules cover land management, foreign worker regulations and a new framework for deciding which sectors are open or closed to overseas investors. The omnibus law is meant to spur investments and create jobs, part of a major push by President Joko Widodo to bring the economy out of its first recession since the Asian financial crisis.
 
Key Points
  • Non-resident taxpayers are subject to 10% tax rate on earnings from debt securities, instead of 20%, or another level aligned with treaties to avoid double taxation. The change is valid six months from the rule’s issuance.
  • Those with palm oil plantations in areas designated as forests must get a state permit within three years or face administrative sanction. The plantations must have been started and operated in line with previous regulations.
  • Business permits are simplified, with those deemed as low-risk only needing an identity number to operate while high-risk ones must get a full license. The rule refers to risk as possible impact to health, safety and the environment.
  • Companies don’t need to apply for a new permit when hiring foreign workers with valid visa from another company, as long as the employee works as a director, commissioner or in roles linked to vocational training, digital economy or oil and gas.

References
Indonesia to Cut Foreign Ownership Curbs to Add Jobs, Lure Funds
Here’s What to Know on Indonesia’s Investment Law Overhaul
Jokowi’s Jobs Law Faces Legal Review as Unions Continue Protest
Bloomberg 2021-02-22 16:47:53