Jakarta. Indonesia will exempt natural resource exporters from income tax on export earnings placed in domestic banks, Finance Minister Purbaya Yudhi Sadewa said on Sunday, as the government seeks to strengthen foreign exchange reserves and increase the retention of export proceeds within the country.

The policy is included in a revised government regulation governing foreign exchange earnings from natural resource exports.

“The government is providing tax incentives for exporters that comply with the requirement to place natural resource export proceeds within Indonesia. The income tax rate becomes 0%,” Purbaya said in Jakarta.

He said the amount of tax incentives granted to each exporter would depend on how long the funds are retained in the domestic financial system.

The new provisions took effect on June 1 and establish different requirements depending on the type of commodity exported.

Under the revised rules, oil and gas exporters are required to place at least 30% of their export proceeds in Indonesian banks for a minimum of three months.

Exporters of other natural resource commodities, meanwhile, must place 100% of their export earnings in special domestic accounts for at least 12 months.

The funds must be deposited through state-owned banks.

The government has also limited the conversion of export earnings from foreign currencies into rupiah to a maximum of 50%.

According to Purbaya, certain exporters in the natural resource sector will be exempt from the full requirements if their buyers are located in countries that have bilateral agreements or special trade arrangements with Indonesia.

“Exporters that are already bound by bilateral agreements are permitted to place 30% of their export proceeds in non-state-owned banks for up to three months,” he said.