Government Regulation No. 78 of 2019 on Income Tax Facility for Investment in Specific Business Fields and/or Specific Regions (Tax Allowance)
Peraturan Pemerintah Nomor 78 Tahun 2019 tentang Fasilitas Pajak Penghasilan untuk Penanaman Modal di Bidang-Bidang Usaha Tertentu dan/atau di Daerah-Daerah Tertentu
What this regulation does
Plain-English summary of the regulation's substance and how it affects PT PMA operations.
PP 78/2019 governs the Tax Allowance — Indonesia's broader-eligible (but smaller) corporate income tax incentive. Eligible PMAs in 245+ designated priority sectors receive a 30% reduction of taxable net income, claimed at 5% per year over 6 years; accelerated depreciation/amortisation; an extended loss-carry-forward of up to 10 years; and a reduced 10% withholding tax on dividends to foreign shareholders. Sectors covered are listed by KBLI and span agriculture, food and beverage processing, textiles, leather, chemicals, pharmaceuticals, machinery, electronics, transportation equipment, and many others. The regulation operates as the default fallback when an investor's KBLI is on the priority list but doesn't meet Tax Holiday's pioneer-industry definition. Application is filed via OSS-RBA before commercial production. Cannot be combined with Tax Holiday (PMK 130/2020); investors elect one regime.
Key provisions
The articles and operational points most commonly referenced in practice.
- 01
30% reduction of taxable income
Spread as 5% per year over 6 years, applied against taxable net income.
- 02
Accelerated depreciation/amortisation
Faster depreciation schedules across all qualifying capex categories.
- 03
Loss carry-forward extension
Up to 10 years (vs. standard 5).
- 04
Reduced dividend withholding
10% on dividends to foreign shareholders (vs. standard 20% / treaty rate).
- 05
245+ priority sectors
Covered by KBLI in the regulation appendix — significantly broader than Tax Holiday's pioneer list.
KBLIs affected
Indonesian business classifications explicitly referenced or governed by this regulation.
6 KBLIs referenced by PP 78/2019 (Tax Allowance)
Click a code to see the full KBLI profile — risk, foreign-ownership, licensing, and setup cost.
- 10120tax-allowance priority
Poultry processing — priority sector
- 13111tax-allowance priority
Spinning of textile fibres — priority sector
- 20232tax-allowance priority
Cosmetic manufacturing — priority sector
- 21022tax-allowance priority
Pharmaceutical preparations — priority sector
- 26120tax-allowance priority
Electronic components — priority sector
- 32501tax-allowance priority
Medical equipment manufacturing — priority sector
Official text
For compliance and dispute work, cite the original Indonesian text directly.
Peraturan Pemerintah Nomor 78 Tahun 2019 tentang Fasilitas Pajak Penghasilan untuk Penanaman Modal di Bidang-Bidang Usaha Tertentu dan/atau di Daerah-Daerah Tertentu
tentang Fasilitas Pajak Penghasilan untuk Penanaman Modal di Bidang-Bidang Usaha Tertentu
Need help complying with PP 78/2019 (Tax Allowance)?
Emerhub is a licensed corporate-services provider in Indonesia. We handle PT PMA setup, OSS NIB application, sector-specific permits, LKPM filing, and the full compliance stack triggered by PP 78/2019 (Tax Allowance). Get an exact quote for your specific situation.
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