Legal Updates for September 2021

Leveling the Playing Field, the Government Cuts Income Tax Rate on Bonds for Local Investors

Following the decrease in income tax for interests on bonds received by foreign investors to 10% under the Omnibus Law (Law No. 11 of 2020), the government has given the same treatment to local investors under Government Regulation No. 91 of 2021. This Regulation replaces Government Regulation No. 16 of 2009, which was lastly amended by Government Regulation No. 55 of 2019. Under this new Regulation, the final income tax rate on interests from bonds received by local investors decreases from 15% to 10%.

This Regulation marks a turning point not only for local investors but also for the local bonds market. Moreover, it is also in line with Indonesia’s National Medium-Term Development Planning, which achievement requires significant funding in order to increase financial inclusion, expand innovation of financial products, develop financial services, and optimise means of alternative financing.