Government issued new regulations namely Government Regulation No. 96 Year 2015 on Facilities and Convenience in the Special Economic Area (“Regulation 96/2015”), which came into force since December 28, 2015. PP 96/2015 is as an implementing regulation specifically on facilities and convenience in the special economic area.
Special Economic Area
Special Economic Area (“KEK”), is an area with certain boundaries within the territory of the Republic of Indonesia stipulated to perform the functions of the economy and has certain facilities, among others:
- Taxation, customs and excise form; (i) the income tax; (ii) value added tax or value added tax and sales tax on luxury goods; and/or (iii) customs and/or excise.;
- Traffic of goods;
- Land; and
- License and Non-license
Facilities and Convenience of Taxation, Customs and Excise
Business entities and entrepreneurs may be given the facility of taxation, customs and excise with the following conditions;
- Determined as business entity to build and/or manage the KEK of the provincial government or regency/city government or the ministry/agency non-ministry government in accordance with its authority;
- Has a development agreement and/or management of KEK between business entity and the provincial government or regency/city government, or the ministry/agency non-ministry government in accordance with its authority;
- Make certain boundary area KEK activities;
- A corporate taxpayer in the country;
- Have obtained principle license of the administrator KEK; and
- Has information systems that are connected to the Directorate General of Customs and Excise.
Facilities and Convenience of Flows of Goods
Prohibition provisions of import and export in KEK is applicable in accordance with the prevailing regulation in the field of prohibitions and restrictions on imports and exports. Outflow of imported goods to be used from the KEK to other area within the customs area (”TLDDP”), regulations in the field of import restrictions prevail, unless already fulfilled at the time of importation. Goods subject to import restrictions and export may be granted exemption and/or facilities.
Export comes with a Certificate of Origin (“SKA”) issued by institutions issuing SKA. Goods released to TLDDP comes with a certificate of local value content published by institutions issuing SKA. Use of SKA issued by the country of origin from abroad may be applied to outflow of goods from KEK to TLDDP. The SKA will be used for partial outflow from KEK to TLDDP using quota cuts.
Facilities and Convenience of Manpower
Governor establishes the Remuneration Council of KEK and Special Tripartite Cooperation Institution KEK consisting of local government, labor union and employers’ associations in KEK for communication, consultation, early detection of an issue of employment issues by providing advice and consideration on steps to resolve the issue.
Business entities and businessman in the KEK as an employer who will employ Foreign Workers (“TKA”) they must have a plan to use the foreign workers and license to employ foreign workers. Collective labor agreements between the labor union and businessman registered to the KEK administrator and be published not more than 4 days.
Facilities and Convenience of Immigration
For foreigners who will make a visit to KEK may be given a visitor’s visa for one (1) trip and a few trips in order to that the foreigners perform the duties of government, business, and/or families.
Immigration officials at KEK may approve limited residence visa to foreigners who intend to stay temporarily for:
- Capital investment;
- Working as an expert;
- Following the husband/wife holding limited stay license;
- Following legitimate parents for children under the age of 18 (eighteen) years; or
- Has a house.
For foreigners who work in KEK and has a temporary residence license, shall be granted permanent residence license, with provisions as follows:
- As manager of business entities or businessman are investing at least 1,000,000,000.00 (one billion Rupiah); or
- Investing at least Rp1,000,000,000.00 ( one billion Rupiah)
For elderly foreign tourists and having obtained a temporary residence license, may be granted permanent residence license.
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