Government of Indonesia to Reduce Taxes for Conversion of Export Proceeds
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After issuing Government Regulation No. 36 of 2023 on Natural Resources Export Proceeds, the government recently issued a new regulation to address private sector concerns about tax policies on export proceeds. Under the new regulation, the maximum tax on interest gained from their deposits, upon conversion, drops to 5% from the previous 7.5%. Additionally, exporters can now opt for a wider choice of instruments to put their earnings in and receive tax breaks.
Since August 2023, authorities have required natural resource exporters retain 30% of their earnings within the domestic Special Proceeds Account for at least three months, with penalties for non-compliance. This is valid for any export value of ≥ USD 250,000 per export customs notification (not per monthly accumulation). This regulation seeks to push exporters to keep their earnings in domestic accounts, with the aim of boosting foreign exchange reserves. However, it has sparked concerns among foreign and domestic exporters, since it lacked public consultation and has created major disruptions in cash flow and operation - not to mention the impact of Rupiah exchange rate volatility.