Suahasil Nazara, Chairman of the Fiscal Policy Agency (BKF) of Indonesia's Finance Ministry, said the government currently has to offer expensive coupons for its sovereign bonds in order to attract investors' interest as they have to pay income tax between 15 and 20 percent (undermining investors' earnings). High coupon rates on government bonds also influence Indonesia's corporate bond yields as investors are not interested in corporate bonds that carry a significantly lower coupon rate compared to the government bonds. However, regarding the removal of income tax on corporate bonds, Nazara could not give any details yet.

Schneider Siahaan, Director of Debt Portfolio and Strategy within Indonesia's Finance Ministry, said the yield on government bonds will automatically drop if the income tax is removed. Indirectly this will also cause corporate bond yields to drop as many of corporate bonds use the government bonds as reference rate. The removal of the income tax on bonds will be discussed with the House of Representatives after the Tax Amnesty Bill has been concluded.

Indonesian Finance Minister Bambang Brodjonegoro added that the removal of the income tax on government bonds will also boost the issuance of Islamic debt paper in Indonesia (known as sukuk). So far the Indonesian government has issued eight series of retail sukuk. The first issuance attracted IDR 5.5 trillion in funds in 2008, while the latest issuance - in 2016 - managed to attract IDR 31.5 trillion in funds (while the investor base grew from 14,295 to 48,444 over the same period). In total, current outstanding rupiah-denominated sukuk in Indonesia reached IDR 380 trillion, while US dollar-denominated sukuk reached USD $9.5 billion. Brodjonegoro said these figures make Indonesia the world's largest sukuk issuer (in terms of outstanding sukuk debt paper).