Recent developments

On 28 October 2016, the Head of the Capital Investment Coordinating Board (BKPM) issued Regulation No. 8 of 2016 on the Second Amendment of the Head of BKPM Regulation No. 14 of 2015 on Guidelines and Procedures for Capital Investment Principle Licenses (Regulation 8), which took effect immediately. Regulation 8 was issued to support the tax amnesty programs initiated by the Indonesian government.

Implication for investors

Regulation 8 amends Articles 30 and 30A of the Head of BKPM Regulation No. 14 of 2015 as amended by the Head of BKPM Regulation No. 6 of 2016 on Guidelines and Procedures for Capital Investment Principle Licenses. It adds tax amnesty program participants as applicants that can enjoy the 3-hour investment license services. Evidence of the tax amnesty submission receipt must be submitted to BKPM (or the relevant authority) to process the application. It also accommodates investors' complaints where some of the authorities appointed to process the 3-hour investment services seem to be not yet ready to process the services.

What the regulation says

Under Regulation 8, an investment license can be issued to foreign investment companies or domestic investment companies (either for new projects or expansion projects) that meet any one of the following criteria:

  1. The total investment is at least Rp1 billion.
  2. The company will employ at least 1,000 people.
  3. The company will engage in certain manufacturing lines of business, or be domiciled in certain areas that fall under an inland free trade arrangement, in accordance with the regulations issued by the Ministry of Industry, taking into account the requirements under point 1 or 2 above.
  4. The company will engage in certain manufacturing lines of business that are part of a supply chain.
  5. The company will be domiciled in a Special Economic Zone.
  6. The company participates in tax amnesty programs, by showing evidence of the tax amnesty submission receipt issued by the Minister of Finance or the relevant appointed official.
  7. The company will engage in certain infrastructure lines of business set out in Regulation 8.

For new projects, an investment license can also be issued to individuals, who must show evidence of the tax amnesty submission receipt issued by the Minister of Finance or the relevant appointed official. Meanwhile for expansion projects, an investment license can also be issued to individuals who have a domestic investment company, who must show evidence of the tax amnesty submission receipt issued by the Minister of Finance or the relevant appointed official.

The investment license services are conducted at BKPM, Provincial Investment Board (BPMPTSP Provinsi), Regency/Municipality Investment Board (BPMPTSP Kabupaten/Kota), Free Trade Zone and Free Port Investment Board (PTSP KPBPB) and Special Economic Zone Investment Board (PTSP KEK), in accordance with their authority. Since the 3-hour investment license services are relatively new, if the relevant authority is not ready to process the services, Regulation 8 allows BKPM to takeover the services. In this case, the relevant authority must submit a statement letter to BKPM stating that it is not yet ready to process the 3-hour investment license services.

Conclusion

The issuance of Regulation 8 is of course a booster for the tax amnesty programs initiated by the Indonesian government. Investors also benefit as investment license services could be now processed directly by BKPM (the initiator of the services) if the relevant authority is not yet ready to process the services.