Page 6 - 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 6 of 13

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

Third, R&D activities fulfill the following 5 criteria, (ii) quality control during commercial production,
namely aiming to render new inventions, based on including routine testing of products.
original concepts or hypotheses, having uncertainty
(iii) repair of defects during commercial production.
over the final results, being planned and having a
budget, and aiming to create something that can be
(iv) repair, addition, enrichment, or other routine
freely transferred or traded in the market.
quality enhancement of existing products.
Fourth, is a priority R&D activity with a focus and
(v) adjustments of existing capabilities to specific
theme as listed in the Appendix of MoF Reg. 153/2020.
requests or customer requirements as part of
Referring to Appendix A of MoF Reg. 153/2020, 11
continuous commercial activities.
focus and research themes are entitled to the facilities,
including food, pharmaceuticals, cosmetics, and (vi) seasonal or periodic design changes of existing
medical devices. products.
Through MoF Reg. 153/2020, Minister of Finance (vii) routine design of equipment and molds.
Sri Mulyani also outlines five types of research and
development (R&D) costs that may be given an (viii) construction engineering, and design in
additional gross income reduction of up to 200%. First, connection with the construction, relocation,
costs related to assets other than land and buildings, rearrangement, or start-up of facilities and
in the form of depreciation or amortization costs and equipment.
supporting costs for tangible fixed assets.
(ix) marketing research.
Second, costs related to goods and/or materials.
To obtain an additional gross income reduction of up
Third, salaries, honoraria, or similar payments paid to
to 200%, taxpayers must apply through the Online
employees, employed researchers, and/or engineers.
Single Submission (OSS) by attaching a proposal
Fourth, management to obtain intellectual property
on the research and development activities and a
rights in the form of patents or PVT rights.
Fiscal Certificate (Surat Keterangan Fiskal/SKF). The
Fifth, remuneration paid to R&D institutions and/or proposal on the R&D activities must at least contain:
higher education institutions in Indonesia that are
(i) number and date of the research and
contracted by taxpayers to perform R&D activities
development activity proposal;
without having the right to the results of the R&D
activities. (ii) name and Taxpayer Identification Number;
R&D costs are charged based on each R&D activity (iii) the focus, theme, and topics of R&D;
proposal. However, if the costs cannot be separated for
each proposal, these costs are charged proportionally (iv) achievement targets of R&D activities;
based on the utilization or assignment time.
(v) the name and Tax Identification Number of the
This regulation also emphasizes that the additional cooperating partner, if the R&D is carried out in
gross income reduction over the cost of assets cannot cooperation;
be granted for assets used as part of investments that
(vi) estimated time required to achieve the final
have received the net income reduction facilities.
results expected from the R&D activities;
The net income reduction facilities are referred to in
Article 31A of the Income Tax Law, Article 29A of Gov.
(vii) estimated number of employees and/or other
Reg. 94/2010 as amended by Gov. Reg. 45/2019.
parties involved in R&D activities; and
In addition, MoF Reg. 153/2020 outlines nine R&D
(viii) estimated costs and year of expenditure.
activities that cannot be given an additional gross
income reduction of a maximum of 200%, these In the event that the R&D activities are carried out
activities include: in cooperation between one or more taxpayers, and
each taxpayer bears part or all of the R&D costs, the
(i) the full application of engineering in production
taxpayers undertaking the cooperation must prepare
activities at an early stage of commercial
a proposal for the R&D activities.
production.
With respect to the application for an additional
gross income reduction, the ministry that organizes