The Role of Tax Holiday in Increasing Investment Volume

Abstract

One of the main revenues of the Indonesian state comes from the taxation sector. The
state imposes taxes on almost all aspects of society, ranging from transportation,
income, purchases, and so on. However, these taxes have the potential to hamper
investment in Indonesia, both from foreign and domestic parties. Investment is one of
the drivers of development in Indonesia, especially in the infrastructure sector. The
main problem faced by investors is the high taxes imposed by the government. One
solution to this obstacle is the introduction of a tax holiday. The policy reduces taxes
for investors who want to invest in Indonesia. This policy was first regulated in Article
15 of Law No.1 of 1967 on Foreign Investment. It is intended to attract foreign
investors into Indonesia. The researcher observes that the tax holiday policy can
increase the volume of investment, but this policy must be carried out according to the
procedures stipulated in the law so that there is no mismanagement by the state which
causes losses to the state itself.