Monica Chandrasa¹, Ameen Talib²

Abstract: Indonesia is the fourth most populous country in the world with a large domestic market open for investment. On 14th August 2015, the Indonesian Minister of Finance issued Regulation No. 159/PMK.010/2015 on Income Tax Reduction Facility (“Regulation 159”). This regulation revokes the previous regulations on the same issue, i.e., Regulation No. 130/PMK.011/2011 as lastly amended by Minister of Finance Regulation No. 192/PMK.011/2014 (“Previous Regulation”). The regulation is basically a tax holiday period for foreign investments meeting the conditions. This paper discusses the provisions of the regulation and the investment climate in Indonesia. The tax holidays in Indonesia coupled with the improvements in the Corruption Perception Index (CPI) and the large domestic market are indeed attractive for foreign investors.

Key words: Indonesia, tax holiday; corruption perception index; foreign investments