Indonesia is considering sweeping tax incentives, including a 0% income tax rate for selected businesses and foreign financial professionals, as it seeks to establish an international financial centre capable of attracting global capital and competing with leading financial hubs in Asia and the Middle East.
The proposal is contained in a draft bill currently under deliberation in parliament as part of President Prabowo Subianto’s broader strategy to strengthen Indonesia’s position as a regional financial powerhouse. Lawmakers began formal discussions on the legislation last week, with the government hoping the new centre will channel more foreign investment into Southeast Asia’s largest economy.
Under the proposal, companies operating within the financial hub would receive a 100% reduction in corporate income tax, effectively paying no tax on qualifying income. Foreign financial experts working in the zone would also be exempt from personal income tax, while overseas investors earning dividends and other investment returns could avoid Indonesian withholding taxes.
The draft legislation goes further by allowing exemptions from value-added tax, luxury goods tax and import duties for eligible businesses. It also gives the government flexibility to introduce additional fiscal incentives through future regulations, creating one of the most generous tax regimes in the region.
To distinguish the proposed financial centre from the domestic economy, businesses established within the zone would be prohibited from raising funds from Indonesian retail investors or conducting transactions with domestic consumers outside the designated area. The structure is intended to position the hub primarily as an international marketplace serving cross-border financial activities.
While authorities have yet to decide on the final location, Bali is among the sites under consideration. The government is also exploring a financing structure that combines public and private capital, including support from sovereign wealth fund Danantara, state-owned enterprises and other investment sources.
The initiative reflects Indonesia’s ambition to attract international banks, investment firms, asset managers and financial technology companies that currently base much of their regional operations in centres such as Singapore and Hong Kong. Officials believe a more competitive tax framework, combined with a dedicated legal and regulatory environment, could encourage global financial institutions to establish operations in Indonesia.
If approved, the financial centre would become one of Indonesia’s most ambitious economic reforms in years. Beyond drawing foreign investment, the government hopes the project will accelerate the development of the country’s financial services industry, create high-value jobs and reinforce Jakarta’s long-term objective of making Indonesia a more influential player in global finance.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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