Indonesia has formally established the Indonesia International Financial Center, known as the PFII, after the House of Representatives passed the necessary legislation on July 21, 2026. The specialized financial zone is designed to attract international capital, globally mobile professionals, and financial institutions to strengthen Indonesia’s position in regional finance, according to outboundinvestment.com.
Operational Timeline and Locations
The government will begin temporary operations of the center at the Danareksa building in Jakarta. This serves as a transition period before the center becomes fully operational at its permanent site in Kura Kura Bali. According to Rosan Roeslani, CEO of Danantara, this transition to the Bali hub is expected to take two to three years.
President Prabowo Subianto has instructed that the implementation be followed up immediately. As part of the setup, the President will appoint a governor and a region manager. Danantara will serve as the region developer, while the center’s operations will be led by a regional head and the appointed governor, as reported by suara.com.
Tax Incentives and Global Compliance
To compete with established hubs in the Middle East and Asia, the PFII legislation introduces substantial fiscal benefits. Qualifying businesses conducting approved financial or supporting activities may receive a 100% reduction in corporate income tax. Mukhamad Misbakhun, Chairman of Commission XI of the DPR, noted that discussions between the government and Parliament included the possibility of this 0% income tax rate lasting for 50 years.
Certain foreign experts in the financial services sector may also qualify for a 100% income tax reduction. Additionally, the government is working to ensure that incentives for value-added tax (VAT), luxury goods sales tax, and import duties remain competitive with other international centers.
Despite these incentives, the Ministry of Finance has clarified that the PFII will adhere to international tax standards. Specifically, the center will follow the 15% Global Minimum Tax (GMT) for multinational enterprises with an annual gross turnover of 750 million euros. Under the Qualified Domestic Minimum Top-up Tax (QDMTT) framework, if the market country applies a rate below 15%, the effective rate will be topped up to reach the 15% threshold, according to ekonomi.bisnis.com.
Scope of Financial Activities
The PFII is intended to bring new international capital into the country rather than recirculating domestic funds. The government expects to attract a variety of entities, including:
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- International banks and investment managers
- Insurers and family offices
- Financial-technology (fintech) companies
- Capital-market and commodity-market participants
- Professional firms supporting cross-border activity
Permitted activities under the framework span banking, Islamic finance, venture capital, asset and trust management, foreign exchange, money-market transactions, and bullion and commodity trading.
Legal Framework and Governance
Finance Minister Purbaya Yudhi Sadewa has emphasized that legal certainty is critical for the center’s success. To this end, the government proposed the establishment of a dedicated court to hear and rule on disputes arising from business activities within the IIFC. The minister stated that an agile, professional dispute resolution mechanism trusted by international business actors
is a primary factor for success, as reported by en.tempo.co.
The legislation also introduces dedicated licensing, immigration provisions, and residency requirements. This includes specific tax treatment for foreign nationals who receive Golden Visa facilities within the PFII. While the central framework is now law, further regulations are still required to finalize eligibility requirements and operational arrangements.
Syahrir Ika, General Chair of the Indonesian Researchers Association (PPI), has noted that while fiscal incentives are necessary, they must be supported by a strong business ecosystem, including political stability, consistent policy, and quality infrastructure, to remain competitive against other global financial centers.
