notarisdanppat.com New Provisions for 300% Gross Income Deduction Incentive for R&D Activities
The Ministry of Finance (MoF) has made another policy reform to encourage research and development (R&D) activities. Through Minister of Finance Regulation (PMK) Number 81 Year 2024, provisions related to gross income reduction incentives or supertax deduction for R&D activities undergo a number of significant changes. This provision comes into effect on January 1, 2025 by replacing the previous regulation contained in PMK 153/2020.
Amount of R&D Supertax Deduction Incentive
Supertax deduction is a gross income reduction incentive given to taxpayers involved in certain R&D activities in Indonesia. As stipulated in Article 432 of PMK 81/2024, this incentive is a strategic step to stimulate investment in R&D. The government provides gross income reduction incentives of up to 300% of the total R&D costs incurred. The forms of this incentive include:
Gross income deduction of 100% of the total R&D costs incurred
An additional gross income reduction of up to 200% of the accumulation of certain R&D costs within a certain period that produce intellectual property rights (IPR) or reach the commercialization stage.
Meanwhile, an additional gross income reduction or supertax deduction of up to 200% can be given based on the results of the R&D carried out, including:
50% if the R&D produces IPR in the form of patents or plant variety protection rights (PVP) registered at the Ministry of Law and Human Rights.
25% if the same IPR is also registered elsewhere as well as overseas patent or PVP offices.
100% if the R&D results are already in the commercialization stage.
25% if the R&D that meets the above points (1, 2, or 3), is carried out in collaboration with government R&D institutions or universities in Indonesia.
Read Also: VAT Provisions for Self-Building Activities PMK 81/2024
Requirements for Obtaining Additional Supertax Deduction
According to Article 434 of PMK 81/2024, certain R&D that can receive an additional gross income deduction as stipulated in Article 432 paragraph (2) letter b, must meet the following conditions:
a. Conducted by certain taxpayers, other than taxpayers conducting business based on mining concession cooperation agreements, work contracts, or production sharing contracts.
b. Commenced no later than since the enactment of PP 45/2019.
c. Meet 5 specific criteria:
Aims to discover new things
Based on original concepts or hypotheses
Has uncertainty of the final result
Is planned and has a clear budget
Aims to create something that can be traded or used freely
d. R&D with a priority focus and theme
Types of Costs that Get Additional Supertax Deduction
Types of R&D costs that can be given an additional gross income deduction or supertax deduction of up to 200%, include:
- Costs of assets other than land and buildings, in the form of
Amortization costs of intangible assets and depreciation of tangible fixed assets.
Support costs for tangible fixed assets, such as water, maintenance, electricity, and fuel.
- Cost of goods and materials
- Labor costs, such as salaries, honoraria, or other forms of payment provided to employees, researchers, and engineers involved in R&D activities.
- The cost of intellectual property rights, such as patents or plant variety protection rights.
- Fees paid to R&D institutions or universities in Indonesia to carry out R&D on behalf of the taxpayer, without giving rights to the results of the R&D to the institution concerned.
All of the above costs must be based on a previously prepared proposal for R&D activities. With this policy, the government encourages companies to more actively invest in technological innovation and development.
Read Also: Procedures for VAT and Luxury Goods Tax Deduction Based on PMK 81/2024
Changes to the Supertax Deduction Policy in PMK 81/2024
PMK 81/2024 introduces a number of key changes that make the application and implementation of incentives simpler, more transparent, and more efficient. Here are some of the points of change:
- Elimination of Fiscal Certificate (SKF) Obligation
One of the striking changes in PMK 81/2024 is the elimination of the obligation to attach a Fiscal Certificate (SKF) in applying for incentives. Previously, taxpayers had to attach an SKF when applying through the online single submission (OSS) system, now it is enough to upload a proposal for R&D activities.
This is stated in Article 437 paragraph (1) of PMK 81/2024 which states that taxpayers applying for incentives no longer need to attach an SKF, provided that they have met the requirements for obtaining the SKF. This means that taxpayers still have to meet the criteria for