Investment allowance is the provision of facilities in the form of a 60% reduction in net income by the government to the labor-intensive sector.
According to Article 4 paragraph (4) letter G of Regulation of the Investment Coordinating Board Number 4 of 2021 concerning Guidelines and Procedures for Risk-Based Business Licensing Services and Investment or (Perka BKPM 4/2021), Investment Allowance is the provision of facilities for reducing net income on investments. new capital or business expansion in certain business fields which are labor-intensive industries.
Labor-intensive industries that can receive an investment allowance are domestic corporate taxpayers and conduct business activities in accordance with the Indonesian Standard Classification of Business Fields (KBLI) and employ an average of 300 Indonesian workers within 1 tax year. (Article 2 paragraph 3 Regulation of the Minister of Finance No.16/PMK.010/2020 concerning Provision of Net Income Reduction Facilities for New Investments or Business Expansion in Certain Business Fields which are Labor-Intensive Industries).
There are 45 labor-intensive industrial business sectors that are entitled to this investment allowance facility. Taxpayers who have received other tax incentives such as tax allowances, tax holidays, and income tax facilities in special economic zones, are no longer entitled to get investment allowance facilities.