Page 5 - Newsletter (Recent Regulations on Tax Holiday Incentives and Super Tax Deduction for R&D Activities)

DDTC Newsletter Vol.04 | No.08 I October 2020 Page 5 of 13

Recent Regulations on Tax Holiday Incentives and
Super Tax Deduction for R&D Activities

MoF Reg. 130/2020 details provisions related to (iv) 25% if the R&D that generates intellectual
the use of tax holiday facilities, as well as reporting property rights in the form of patents or PVT
mechanisms for investment realization and production rights (subparagraphs a, b) and/or reaches the
realization. commercialization stage (subparagraph c), is
carried out in collaboration with government
R&D institutions and/or higher education
Super Tax Deduction for R&D institutions in Indonesia.
Activities Commercialization is a production activity in Indonesia
and the sale of goods and/or services resulting from
Minister of Finance Sri Mulyani Indrawati has officially R&D. The commercialization of the results of R&D
issued a regulation on the granting of super tax activities may be performed by taxpayers that carry out
deduction incentives for research and development R&D activities or other taxpayers. However, taxpayers
(R&D) activities. The granting of these incentives that may obtain additional gross income reduction of
is outlined in the Minister of Finance Regulation 100% are only taxpayers that perform R&D activities.
No. 153/PMK.010/2020 concerning the Granting
Based on Article 3 paragraph (3) of MoF Reg.
of Gross Income Reduction for Certain Research
153/2020, commercialization may be performed
and Development Activities in Indonesia (MoF Reg.
by other taxpayers if the taxpayer carrying out R&D
153/2020).
activities meets 2 conditions. First, said taxpayer has
Taking effect as of 9 October 2020, this regulation is obtained intellectual property rights in the form of
a derivative regulation of Government Regulation No. patents or plant variety protection rights. Second, the
45 of 2019 concerning the Amendment to Government taxpayer obtains income in the actual value or that
Regulation No. 94 of 2010 concerning the Calculation which should be received from the use of intellectual
of Taxable Income and Payment of Income Tax in the property rights in the form of patents or PVT rights
Current Year (Gov. Reg. 45/2019). from other taxpayers that perform commercialization.

MoF Reg. 153/2020 reiterates that taxpayers that A patent refers to an exclusive right granted by the
perform certain R&D activities in Indonesia may be state to an inventor for his invention in the technology
given a gross income reduction of up to 300% of the sector and for a certain period of time, said inventor
total costs incurred for R&D activities. implements the invention himself or gives consent to
other parties to implement it.
The gross income reduction of a maximum of 300%
includes two things. First, a gross income reduction PVT rights, on the other hand, refer to special rights
by 100% of the total costs incurred for R&D activities. granted by the state to breeders and/or holders of
Second, an additional gross income reduction of a PVT rights to use their own breeding varieties or give
maximum of 200% of the accumulated costs incurred consent to other people or legal entities to use them
for R&D activities within a certain period. In further for a certain period of time.
detail, the amount of additional gross income reduction
MoF Reg. 153/2020 also details the provisions on
of a maximum of 200% includes:
taxpayers that may obtain a gross income reduction
(i) 50% if the R&D generates intellectual property of a maximum of 200% on R&D. Based on Article 4
rights in the form of patents or plant variety paragraph (1) on MoF Reg. 153/2020, 4 conditions
protection (Perlindungan Varietas Tanaman/ must be met to obtain an additional gross income
PVT) rights that are registered in a domestic reduction of a maximum of 200%.
patent office or PVT office;
First, R&D activities are not carried out by taxpayers
(ii) 25% if the R&D generates intellectual property that run a business based on production sharing
rights in the form of patents or PVT rights that contracts, work contracts, or mining concession
are not only registered at a domestic patent cooperation agreements and whose taxable income
office or PVT office, but are also registered at a is calculated based on separate provisions that are
foreign patent office or PVT office; different from the general provisions of Income Tax.
Second, R&D activities started to be implemented at
(iii) 100% if the R&D reaches the commercialization the enactment of Gov. Reg. 45/2019, which amended
stage; and/or Gov. Reg. 94/2010, at the latest.