MUC Consulting explores new opportunities for global family offices in Indonesia

When it comes to choosing a destination for a family office, the same names have long dominated the conversation: Singapore, Hong Kong, Dubai, and Abu Dhabi. These jurisdictions have successfully built a reputation as wealth management hubs capable of attracting wealthy individuals and families from around the world.

Singapore, for example, had more than 2,000 single-family offices as of the end of 2024, an increase of around 43% from the previous year. This growth shows that competition among jurisdictions has shifted. Countries are no longer competing solely to attract investment, but also to become destinations where wealth is managed; investment decisions are made, and multigenerational strategies are developed.

Now, through the Law on the Indonesia International Financial Centre (PFII Law), Indonesia is entering the same arena. The government is sending a clear signal that Indonesia aims to become more than just an investment destination. It also seeks to establish itself as a global financial center that supports wealth management activities, including through the development of a family office ecosystem.

This momentum deserves attention, particularly from high-net-worth individuals (HNWI), family offices, and global investment advisers. In addition to offering a large domestic market, sustained economic growth, and expanding investment opportunities, Indonesia is now complementing these advantages with a regulatory framework that provides a foundation for the development of an international-standard wealth management industry.

Addressing the Needs of Global Family Offices
For families with substantial wealth, choosing a location for a family office is not simply about finding a jurisdiction with low tax rates.

What they seek is certainty.  They want to know whether asset ownership structures can be legally established, whether the tax regime provides certainty, and whether family members and professional staff can reside and move easily. They also need a legal, tax, banking, and investment ecosystem capable of supporting long-term wealth management.

These various needs are beginning to be addressed through the PFII Law.

One important step is the recognition of family offices as one of the financial sector business activities that may operate within the PFII area. This provision goes beyond simply adding another type of business activity. The government is explicitly positioning family offices as part of the financial services ecosystem it seeks to develop in Indonesia.

The PFII Law also provides room for the use of various legal structures commonly used in international practice, such as special purpose vehicles (SPVs) and trusts. This flexibility is important because each family has different needs when it comes to managing assets, investments, and succession planning.

Recognizing family offices as a business activity is an important first step and sends a strong message. However, the competitiveness of a wealth management hub is also determined by its ability to provide legal structures that meet the specific needs of each family.
In international practice, wealthy families rarely manage all their assets directly. Instead, they use various investment vehicles and legal structures to organize ownership, protect assets, manage investments, and prepare for multigenerational succession.

The PFII Law accommodates these needs by allowing the establishment of various forms of legal entities, including special purpose vehicles (SPVs) and trusts. Such flexibility is important because each family has a different asset composition, investment objectives, risk profile, and inheritance strategy. In other words, there is no one-size-fits-all structure.

In addition, the PFII Law is beginning to build a supporting ecosystem by recognizing various professions that support the financial sector, ranging from public accountants, notaries, legal consultants, tax consultants, appraisers, and actuaries to investment managers. The presence of these professionals is an important part of supporting the comprehensive operation of family offices.

Not Just About Tax Incentives
Many people assume that the main attraction of a family office is always related to taxation. In practice, however, tax is only one part of the broader range of considerations.

HNWIs and other global wealth owners need an environment that facilitates both their business activities and personal lives. Legal certainty, regulatory stability, ease of conducting cross-border investments, the quality of professional advisers, and mobility are often considered just as important as fiscal incentives.

Therefore, it is appropriate that the PFII Law does not focus solely on taxation. The various non-fiscal facilities provided, such as immigration facilitation, Golden Visas, residence permits, streamlined licensing, and other administrative services, show that the government is seeking to build an ecosystem rather than simply offer incentives.

Nevertheless, taxation remains one of the key attractions. The PFII Law provides a basis for various tax facilities for businesses conducting activities within the PFII area, including family offices, as well as for certain eligible parties subject to further requirements.
These facilities include Corporate Income Tax reductions of up to 100%, exemptions from Income Tax on certain income sourced outside Indonesia, a 0% Final Income Tax rate for certain parties, exemptions from Income Tax withholding or collection, as well as various facilities related to Value Added Tax (VAT) and customs duties.

The PFII Law even provides a basis for granting Income Tax facilities for periods of up to 50 years, subject to the requirements and implementing provisions to be stipulated at a later stage.

Tax Subject Exemption for HNWI
For HNWI, there is another provision worth noting. Under certain conditions, foreign nationals registered with a family office in the PFII area, holding a Golden Visa, and not carrying out active business activities or working in Indonesia, may be exempted from being treated as Domestic Tax Subjects. This scheme has the potential to provide the certainty that has long been one of the key considerations for global investors.

The PFII Law also provides special treatment for inheritance. Under certain conditions, tax on inherited assets will not apply if the inherited assets are registered with a family office in the PFII area, and the deceased was a foreign national who was also registered with the same family office. This provision indicates that Indonesia is beginning to accommodate one of the key needs of HNWI: ensuring that the transfer of wealth to the next generation can be carried out more efficiently and systematically.

Overall, these provisions show that Indonesia is beginning to establish the foundation needed for family offices not only to invest in Indonesia but also to use Indonesia as a base for wealth management.

Designing the Structure from the Outset
The PFII Law marks Indonesia's first step toward building a more competitive family office ecosystem in the region. Although its success will depend on various implementing regulations and policy consistency, the government's direction demonstrates a commitment to creating a more conducive environment for multigenerational wealth management.

For global HNWI, this momentum is worth taking advantage of the outset. Establishing a family office is not merely about choosing a location. It also involves structuring legal arrangements, designing international tax strategies, managing assets across jurisdictions,
and establishing integrated family governance and succession planning. The earlier the planning begins, the greater the opportunity to build a structure that is efficient, adaptable, and aligned with regulatory developments.

This complexity also means that tax considerations cannot be separated from the overall design of a family office. Ownership structures, transactions between related entities, cross-border income flows, and the pricing of transactions between related parties need to be structured with due consideration of international tax principles and applicable transfer pricing rules.

In this context, expertise in transfer pricing and international taxation is particularly relevant to meeting the needs of family offices. MUC Consulting, for example, has expertise in transfer pricing, including cross-border transactions and business structures involving related parties. This expertise is also part of MUC’s focus on addressing the tax needs of HNWI, particularly by taking a holistic view of the links between asset structures, investments, transactions, and their tax implications.

This approach is important because every HNWI has different needs. A structure that works efficiently for one family may not necessarily be suitable for another. The objective, therefore, is not simply to take advantage of available tax facilities, but to ensure that each structure is supported by a clear legal and tax basis and can be properly justified.

In the end, the PFII Law is not just about attracting family offices to Indonesia. It is also about building trust in Indonesia as a destination for wealth management. For global HNWIs, the focus should go beyond incentives to how well the broader ecosystem is prepared to support sustainable, multigenerational wealth management.

With proper planning from the outset, the opportunities offered by PFII can be incorporated into a more structured framework while maintaining compliance, sound governance, and alignment with evolving international tax regulations.