Indonesia plans 0% income tax rate for international financial center in Bali

Indonesia wants to turn a small island in Bali into a global financial hub, and it’s bringing the one incentive that tends to get capital moving faster than anything else: a zero percent tax rate.

The country’s proposed International Financial Center, anchored in the Kura Kura Special Economic Zone on Serangan Island, would exempt foreign-sourced capital from income tax entirely. Finance Minister Purbaya Yudhi Sadewa put it plainly: money entering the zone from overseas won’t be taxed.

The Bali play

This isn’t just a tax holiday dressed up in a press release. Indonesia is building an entire regulatory architecture around the IFC, rooted in amendments to Law No. 4 of 2023, known as the P2SK/PPSK Law, which explicitly allows for the creation of special international financial zones.

The government is targeting legislative approval of the PFII Bill by August 2026. That bill would formalize the tax exemptions, operational guidelines, and the broader legal framework governing the zone.

The incentive package goes beyond the headline zero-tax rate. Corporate tax relief and holidays are on the table, along with exemptions on withholding tax for entities operating within the financial center. The government is also working on eased immigration and residency requirements. Indonesia is even considering a specialized court for dispute resolution within the zone, potentially incorporating elements of English common law. That’s a direct page from Dubai’s DIFC playbook, which has attracted hundreds of financial firms in part because it operates under a familiar, internationally recognized legal system rather than local civil law.

Following the Dubai model

The long-term investment target for the IFC is IDR 104.4 trillion, roughly $6 billion. As of Q1 2026, the Kura Kura Bali SEZ has attracted IDR 1.62 trillion in investment, approximately $91 million, and created 2,146 jobs.

The initiative is part of President Prabowo Subianto’s broader economic strategy to diversify Indonesia beyond its traditional reliance on tourism and commodities. The target tenants are international banks, asset managers, fintech firms, and family offices.

What this means for crypto and digital assets

Indonesia has been evolving its stance on digital asset taxation in parallel with the IFC development. A zero-tax financial zone that attracts fintech firms and asset managers inevitably creates adjacency to crypto and blockchain ventures.

The key dates to watch are straightforward. The PFII Bill’s target approval in August 2026 will determine whether these incentives become law or remain aspirational. If passed, the implementing regulations around tax exemptions, residency permits, and the legal framework will dictate how quickly capital actually flows in. The gap between the current $91 million in investment and the $6 billion target tells you exactly how much heavy lifting remains.

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