Examining the Tax Holiday Scheme in Special Economic Zones: A Fiscal Strategy to Encourage Investment

In order to accelerate the achievement of national economic development, it is necessary to increase capital investment through the preparation of areas that possess economic and geostrategic advantages. These areas are prepared to maximize industrial activities, exports, imports, and other economic activities with high economic value, known as Special Economic Zones (SEZs). Based on Article 1 point 1 of the Law of the Republic of Indonesia Number 39 of 2009 concerning Special Economic Zones, an SEZ is an area with specific boundaries within the jurisdiction of the Unitary State of the Republic of Indonesia that is designated to carry out economic functions and to obtain certain facilities. As of 12 February 2026, there are 25 SEZs spread across various regions as stipulated in the Regulation of the Secretary General of the National Council for Special Economic Zones Number 9 of 2025, including, among others, the Gresik SEZ, Mandalika SEZ, and Kendal SEZ.SEZs are granted ultimate facilities and conveniences, namely fiscal and non-fiscal incentives. One of the available fiscal incentives is the Corporate Income Tax facility. Referring to Article 4 paragraph (1) of Ministry of Finance Regulation (PMK) Number 237/2020 as lastly amended by PMK Number 33/2021, one form of Corporate Income Tax facility provided is the reduction of Corporate Income Tax (tax holiday). This facility provides a reduction of Corporate Income Tax payable in certain fiscal years for a specific period of time. Based on the calculation of Corporate Income Tax that has been determined by the taxpayer receiving this facility, the amount of tax payable will be reduced by a certain percentage that has been granted for the stipulated period.

Who Is Entitled to Utilize the Tax Holiday Facility in SEZs?

Within an SEZ, investors or business entities are classified into two (2) types, namely Business Entities and Business Actors. Referring to Article 4 paragraphs (2) and (3) of PMK 33/2021, the tax holiday facility may be utilized by entities that have obtained a license as a Business Entity or Business Actor and have fulfilled certain criteria. According to Article 1 point 6 of PMK 33/2021, a Business Entity is a legally incorporated company in the form of a State-Owned Enterprise, Regional-Owned Enterprise, cooperative, private entity, or joint venture established to carry out business activities in an SEZ. Meanwhile, under Article 1 point 7 of PMK 33/2021, a Business Actor is a company in the form of a legal entity, non-legal entity, or an individual business that conducts business activities within an SEZ.

Criteria for Taxpayers Eligible for the Tax Holiday Facility in SEZs

Based on Article 8 of PMK 33/2021, the criteria for taxpayers eligible to receive the tax holiday facility are as follows:

1. being a domestic corporate taxpayer that makes capital investment in the main activities within an SEZ with a minimum investment value of IDR 100,000,000,000.00 (one hundred billion rupiah);

2. having the status of an Indonesian legal entity;

3. never having been issued a decision letter granting tax holiday and/or tax allowance facilities;

4. attaching a tax clearance certificate for all shareholders listed in the deed of establishment or the latest deed of amendment if the Business Entity or Business Actor is directly owned by a domestic taxpayer;

5. specifically for Business Entities, having a commitment to realize a minimum capital investment of IDR 100,000,000,000.00 (one hundred billion rupiah) within a maximum period of 4 (four) years from the Commercial Production Commencement Date; and

6. specifically for Business Actors that make capital investment in SEZs located in the Special Capital Region of Jakarta Province, West Java Province, Banten Province, Central Java Province, Special Region of Yogyakarta Province, and East Java Province, being required to fulfill the commitment to realize the investment plan within a maximum period of 5 (five) years from the issuance of the decision letter granting the facility.

Differences in the Tax Holiday Treatment for Business Entities and Business Actors

It should be noted that the form of the tax holiday facility is granted differently between Business Entities and Business Actors. The following table presents a comparison of the tax holiday facilities for Business Entities and Business Actors based on PMK 33/2021.

Aspect	Business Entity	Business Actor
Legal Basis	Article 6 paragraphs (1) and (3) of PMK 33/2021	Article 6 paragraphs (2) and (3) of PMK 33/2021
Minimum Investment	≥ IDR 100 billion	≥ IDR 100 billion
Corporate Income Tax Reduction	100%	100%
Main Facility Period	10 tahun (fixed)	Tiered based on investment value
Details of Facility Period	Not tiered	• IDR 100 billion to less than IDR 500 billion → 10 years • IDR 500 billion to less than IDR 1 trillion → 15 years • ≥ IDR 1 trillion → 20 years
Transition Period After Expiry	50% reduction for the following 2 fiscal years	50% reduction for the following 2 fiscal years
Scheme Characteristics	A single fixed scheme regardless of investment exceeding IDR 100 billion	A progressive scheme (the larger the investment, the longer the facility period)

How to Utilize the Tax Holiday Facility in SEZs?

The process of applying for the utilization of the tax holiday facility can be carried out by referring to the further provisions stipulated in PMK 237/2020 as lastly amended by PMK 33/2021. DSH Tax Consulting is ready to assist with these needs.

Do not merely become business entities and business actors who follow policy. Become business actors who utilize it strategically. Contact DSH Tax Consulting today and ensure that every investment decision you make is built upon a strong, secure, and visionary fiscal foundation.

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