The Government together with the House of Representatives (DPR) officially passed the Bill on the Indonesia International Financial Center (IIFC Bill) on 21 July 2026.
The Government together with the House of Representatives (DPR) officially passed the Bill on the Indonesia International Financial Center (IIFC Bill) on 21 July 2026. This regulation is a refinement of the initial draft that had previously been prepared in early July 2026.
Compared to the initial draft, which consisted of 7 chapters and 53 articles, the passed IIFC Bill has now been expanded to 10 chapters and 73 articles. This expansion brings a number of important changes, ranging from strengthening institutional governance and the special judicial system, to the regulation of business activities and the provision of clearer tax incentives.
So, what exactly is the IIFC, and what are the new provisions introduced in this bill?
The Indonesia International Financial Center (IIFC) is an area designed to serve as a hub for international financial services activities in Indonesia. The formation of the IIFC itself is a mandate under Article 248A of Law Number 4 of 2026 on the Development and Strengthening of the Financial Sector. The provision for establishing the IIFC aims to grow sustainable national economic activity and encourage the diversification of the national economy.
The Government may designate one or more IIFC areas, with distinctive features in financial independence and law adopted from international standards. The area also receives special treatment, including tax facilities and other special facilities.
The operation of the IIFC is carried out by the IIFC Council, which is responsible for managing, supervising, and ensuring that the goals of the IIFC as an internationally standardized financial hub are achieved.
Through this bill, various business sectors can operate within the IIFC area, from the financial sector and its supporting businesses, to nonfinancial sectors such as hospitality, tourism, and culinary services. Companies operating in the IIFC may also establish various forms of business entities, such as legal entities, Special Purpose Vehicles (SPVs), trusts, or other legal entity forms that will be further regulated through IIFC Council Regulations.
One aspect that deserves attention in the IIFC Bill concerns the location of the IIFC area. In the passed draft, the Government stipulates that the location of the IIFC cannot fall within a Special Economic Zone (SEZ). This is a change from the initial draft, which had previously left open the possibility of the IIFC being located within an SEZ. With this clearer boundary, the status and regulation of the IIFC will not overlap with existing SEZ law.
The IIFC Bill accommodates various business activities in the financial, banking, insurance, Islamic finance, family office, SPV, and investment management sectors. Beyond the financial sector, this regulation also covers supporting services such as public accountants, appraisal services, notaries, and legal, financial, and tax consultants. This bill also provides certainty regarding the business entity forms that can be established within the IIFC: business entities, legal entities, SPVs, trusts, or other forms to be further regulated through IIFC Council Regulations. This provision gives business operators clear scope to determine a business structure that fits their needs.
In addition to regulating the permitted business activities and entity forms, Article 8 of the IIFC Bill also clarifies several restricted activities for companies operating within the IIFC area. These restrictions include: collecting public funds in Indonesia, whether in rupiah or foreign currency; selling financial products to the public outside the IIFC without approval from the relevant authority; opening rupiah accounts without following applicable provisions; providing loans outside the IIFC within Indonesian territory except in accordance with minimum lending provisions that will be further regulated; and other activities to be determined later through IIFC Council regulations. With these more detailed provisions, the boundary between permitted and prohibited activities becomes much clearer than in the initial draft.
In line with the restrictions under Article 8, the IIFC Bill also specifically regulates administrative sanctions for companies that violate these provisions. Sanctions that may be imposed range from written warnings, restriction or freezing of products, services, or business activities, dismissal of management, administrative fines, up to revocation of business licenses or product licenses, as well as other administrative sanctions to be determined later. This provision serves as the legal basis for compliance enforcement within the IIFC.
The IIFC Bill gives special attention to the development of an internationally standardized Islamic finance ecosystem, with an emphasis on strengthening the contribution of the national financial sector and its international competitiveness.
This provision mandates the development of a comprehensive and innovative ecosystem, so that international Islamic principles, rules, and standards can be applied and adopted within the IIFC area. This shows that the development of the Islamic finance sector is an integral part of the overall development of the IIFC.
IIFC Advisory Council
Authority to manage the IIFC is delegated to the IIFC Governor, who is appointed and reports directly to the President. To support and ensure that the goals of establishing the IIFC are achieved, an IIFC Advisory Council is formed, consisting of a Minister who also serves as chair, the Governor of Bank Indonesia, the Chair of the OJK Board of Commissioners, the Chair of the LPS Board of Commissioners, and the Head of PPATK.
In carrying out its functions, the IIFC Advisory Council may provide policy recommendations to the IIFC Council within the scope of formulating strategic IIFC policy. These recommendations may cover financial sector development, strengthening investment, fiscal risk mitigation, governance, and other policies of national scope.
IIFC Council
The IIFC Council holds special authority related to managing the IIFC, including granting investment permits, ease of doing business, and special facilities to parties supporting IIFC financing in preparing, building, and developing the IIFC. In carrying out its duties, the IIFC Council is authorized to set strategic plans and policies, implementing regulations, and other special facilities within the IIFC; to supervise other IIFC institutions; to approve the annual work plans and budgets of, and receive accountability reports from, other IIFC institutions.
In setting strategic plans and policies within the IIFC, the IIFC Council is required to consider the social, economic, and environmental impacts that will result for the Indonesian public.
IIFC Management Agency (LP PFII)
To support the operational work of the IIFC Council, day to day operations may be carried out by the IIFC Management Agency (LP PFII). LP PFII is tasked with managing IIFC operations and regulating and supervising business activities in other sectors, including transportation, healthcare, tourism, food and beverage, and other business activities.
LP PFII is authorized to provide administrative, operational, and business services; to develop and operate infrastructure, technology, and facilities; and to collect levies, fees, and charges from business operators conducting activities within the IIFC through coordination with relevant ministries, agencies, and bodies.
The initial capital of LP PFII comes from special investment by BPI Danantara, granted state or regional assets, business entities, and other sources in accordance with applicable law. LP PFII may manage assets fully based on principles of good, accountable, and transparent governance, including obtaining loans and providing guarantees for operational needs. To support this principle, the management audit and financial accountability of LP PFII are carried out by a public accountant.
IIFC Financial Services Supervisory Agency (LPJK PFII)
LPJK PFII is an independent, transparent, and accountable institution, although it remains under the supervision of the IIFC Council. Its duty is to regulate and supervise business activities in the financial sector and its supporting businesses, and to maintain the stability of the financial system within the IIFC.
LPJK PFII is authorized to set regulations; to supervise and examine business operators in the financial and supporting sectors; to issue and revoke business licenses or approvals for business activities; to impose administrative sanctions on violating business operators; and to collect levies, fees, and charges for services rendered.
To support these duties, LPJK PFII has access to obtain information from business operators, with an obligation to maintain the confidentiality of that information, except for tax purposes and the implementation of binding international agreements to which the Government is a party.
One important change in the IIFC Bill concerns the structure of the IIFC Court. Previously, the IIFC used a first and final instance system; this bill changes it into a special court within the general court system, consisting of a Court of First Instance and a Court of Appeal.
The jurisdiction of the IIFC Court has also been expanded. It is no longer limited to specific disputes, but now covers bankruptcy and restructuring cases, cases relating to business activities within the IIFC, cases involving contracts executed within the IIFC, cases relating to tax facilities within the IIFC, cases involving the IIFC Council, LP PFII, or LPJK PFII, as well as other civil cases arising within the area.
The composition of the IIFC Court consists of a chief judge, deputy chief judge, judges, a registrar, a clerk, and a bailiff. Justices serving on this court are generally required to have expertise in banking law, capital markets law, bankruptcy law, tax law, international commercial law, or other fields relevant to the objectives of the IIFC.
This bill also clarifies provisions on ad hoc judges, covering judges with a fixed term of office and judges appointed for specific cases. An ad hoc judge may even be appointed Deputy Chief Judge of the IIFC Court, and under certain conditions, this position may be filled by a foreign national who is registered with the IIFC Council.
The IIFC Court is authorized to establish its own procedural law, issue execution orders, orders for provisional attachment, freezing of assets, and other temporary protective measures, and to cooperate with Indonesian and foreign courts on judicial assistance, evidence, bankruptcy matters, and dispute resolution.
As a key draw for investors, the IIFC Bill introduces tax facilities in the form of Income Tax (PPh), Value Added Tax and/or Sales Tax on Luxury Goods (PPnBM), as well as customs facilities.
Financial and investment business activities carried out by foreign taxpayers receive PPh facilities for up to 50 years. Meanwhile, supporting sectors, nonfinancial sectors, LP PFII, and LPJK PFII also receive PPh facilities, though for a shorter period compared to the financial and foreign investment sectors.
This PPh facility applies to income originating from within the IIFC, as well as to business operators, professionals, and foreign taxpayers who meet qualifications to be determined later.
The PPnBM facility is provided in the form of tax not collected on the supply of strategic taxable goods or services and the import of certain strategic taxable goods, including a luxury goods tax exemption specifically for the transfer of luxury residences. Customs facilities take the form of import duty exemptions on goods imported for the construction and development of the IIFC.
Parties that have received tax facilities but are later found not to meet the applicable requirements will be subject to sanctions, including revocation of the facility, an obligation to pay the previously uncollected tax, plus sanctions in accordance with applicable tax laws.
The IIFC Bill introduces a new provision that had not previously been regulated: an exemption from inheritance tax. This exemption applies on condition that both the inherited assets and the testator, who must be a foreign national, are registered with a family office within the IIFC.
In line with the mandate for its establishment, the IIFC operates with a number of distinctive features, including with respect to the law and operating language used. English is established as the operating language for decisions, policies, contracts, and judicial proceedings within the IIFC.
This bill also emphasizes that legal principles, jurisprudence, international commercial law, international financial center practices, and international standards of fairness and equity may be applied to activities within the IIFC area.
Even so, the IIFC and all activities within it remain subject to the laws applicable in Indonesia, with certain exceptions, including provisions of Indonesian civil law and business law, as well as certain other regulations, guidelines, and provisions established by the IIFC Council.
The Indonesia International Financial Center (IIFC) Bill brings a number of important refinements to the operation of the IIFC as an internationally standardized financial hub in Indonesia, ranging from strengthened governance structures and a two tier judicial system, to more detailed regulation of business activities and long term tax incentives. This regulation also clarifies practical matters for business operators, including activity restrictions, administrative sanction mechanisms, and a number of new provisions such as the use of English as the operating language and the application of international legal principles within the IIFC.
Although the IIFC Bill already provides a far more comprehensive legal framework, a number of technical provisions will still be further regulated through IIFC Council Regulations and other implementing regulations. Business operators and interested parties therefore need to continue following developments in this regulation in order to understand the requirements, governance, and obligations that will apply to the operation of the IIFC.
Don't Miss Out on the IIFC Opportunity
The IIFC opens a new chapter for businesses, with tax incentives running for decades, internationally standardized legal certainty, and streamlined ways of doing business in this strategic zone. Making the most of these opportunities, though, takes the right guidance.
Trust CPT Corporate, your reliable partner for company incorporation, business licensing, and regulatory compliance within the IIFC. Reach out to our team today and give your business a head start.
Pemerintah bersama Dewan Perwakilan Rakyat (DPR) resmi mengesahkan Rancangan Undang-Undang tentang Pusat Finansial Internasional Indonesia (RUU PFII) pada 21 Juli 2026.
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