PPP projects eligible for tax breaks: Bappenas
The Jakarta Post, Jakarta - 17/01/2011
Investors planning to engage in infrastructure projects using public-private partnerships (PPP) could enjoy a tax holiday starting this year, an official from the National Development Agency (Bappenas) says.
Bappenas' facilities deputy Dedy Priatna said that almost all PPP projects had the potential to be exempt from income tax for a certain period of time, Kontan.co.id news portal reported.
The legal basis for the tax breaks is government regulation No. 94 on the Calculation of Taxed Income and Income Tax Settlement in the Recurring Year, which was issued last year. The regulation grants the Finance Ministry the option to grant tax holidays.
However, Dedy said that out of the five PPPs to be tendered by the government this year, only a project to build a steam-powered electric generator in Central Java worth US$3 billion was eligible to receive the tax break.
The other projects are the US$30 million Tanah Ampu Port project, Bali, the $735 million Manggarai-Soekarno-Hatta railway track project, the $475 million Medan-Kuala Namu airport toll road, and the $200 million Umbulan drinking water project in East Java.
"This policy is needed to attract investors to projects and sectors that have been less popular or that have higher risks, such as geothermal energy," Dedy said.
He said the selection processes and considerations used to decide which projects would get the tax breaks needed to be extensive.