Income Tax Exemptions on Export Revenues from Indonesian Natural Resources

Indonesia’s government issued Government Regulation 22 of 2024 (GR 22/2024) on the income tax exemptions available for natural resource exporters who store their export revenues in Indonesian banks.

GR-22 revokes Article 2 of GR-131 and provides a new legal basis for income earned by exporters from investing their export revenues. The regulation also stipulates the criteria of the financial instruments available to invest in Indonesia.

Commodity exporters are known to park their earnings abroad, such as in Singapore, for better incentives. The Indonesian government hopes the move will bolster the supply of foreign exchange in the country as well as support the rupiah which has been depreciating against the dollar. 

Financial instruments criteria

GR 22/2024 stipulates the criteria of financial or monetary instruments that exporters of Indonesian natural resources can invest in. These are:

• Financial instruments in Indonesia issued by the Indonesian Export Financing Agency and monetary instruments issued by Bank Indonesia;
• The funds are sourced from the foreign exchange proceeds from natural resources exports;
• Not to be traded on a secondary market; and
• The funds must be placed and invested in the financial instrument for at least one month.

Income tax exemptions

The exporter is eligible for income tax exemptions based on the period the funds are stored in Indonesia.

Foreign Currency Funds
Income tax rates (%)	Period
0	More than 6 months
2.5	6 months
7.5	3 months but up to 6 months
10	1 month but up to 3 months

 

Foreign Funds Converted to Rupiah
Income tax rates (%)	Period
0	More than 6 months
2.5	3 months but up to 6 months
5	1 month but up to 3 months

 

GR 22/2024 represents a strategic move by the Indonesian government to encourage natural resource exporters to keep their earnings within the country. By providing income tax exemptions and expanding the scope of eligible financial instruments, the regulation aims to increase the supply of foreign exchange and support the stability of the rupiah. This initiative is expected to make investing in Indonesia more attractive for exporters and contribute to economic growth.

In 2023, Indonesia saw 1,400 trillion rupiah (US$92 billion) in combined foreign and domestic investments and 1,650 trillion rupiah (US$108 billion) in 2024. This is expected to be dominated by investments in the commodity sectors – particularly mining –  as the government looks to ban more raw minerals for export.

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