Amount of Supertax Deduction Incentive for R&D Activities

OPTIMIZATION of activities in the field of research and development is one of the keys to increasing productivity and business continuity.

In addition, the development of research and development activities can also encourage the industry to make discoveries, innovations, mastery of new technologies, and/or transfer technology for industrial development.

Thus, there is a need for tax incentives to support and encourage activities in the field of research and development. Currently, the Indonesian government has provided supertax deduction incentives for research and development activities.

The provision of supertax deduction incentives for research and development activities is regulated in the Minister of Finance Regulation no. 153/PMK.010/2020 concerning Provision of Gross Income Reductions for Certain Research and Development in Indonesia ( PMK 153/2020 ).

By Article 1 paragraph (1) of PMK 153/2020, research can be defined as an activity carried out according to scientific methodology to obtain data and information relating to an understanding of natural and/or social phenomena, proving the truth or untruth of an assumption and/or hypotheses, and drawing scientific conclusions.

Meanwhile, development is an activity to increase the benefits and carrying capacity of science and technology that has been proven correct and safe to improve the functions and benefits of science and technology. The definition of development is stated in Article 1 paragraph (2) of PMK 153/2020.

Based on Article 2 paragraph (1) PMK 153/2020, taxpayers who carry out certain research and development activities in Indonesia can take advantage of a maximum gross income reduction of 300%.

The reduction in gross income is determined by the total costs incurred for certain research and development activities in Indonesia which are charged within a certain period.

Furthermore, the additional gross income reduction of a maximum of 200% may include 4 things. First, a 50% supertax deduction incentive is given if research and development results in intellectual property rights in the form of patents or plant variety protection rights (PVT) which are registered at the domestic patent office or PVP office.

Second, the provision of supertax deduction incentives of 25%. The amount of the incentive is given if research and development results in intellectual property rights in the form of patents or PVP rights which are registered at the patent office or overseas PVP office, other than those registered at the domestic patent office or PVP office.

As additional information, PVP rights can be defined as special rights granted by the state to breeders and/or holders of plant variety protection rights to use their breeding varieties or give approval to other people or legal entities to use them for a certain period.

Third, a 100% supertax deduction incentive is given if the research and development reach the commercialization stage. Fourth, is the provision of supertax deduction incentives of 25%.

An incentive of 25% is given if research and development results in intellectual property rights in the form of patents or PVP rights as referred to in the first, and second points, and/or achieves commercialization in the third point through a collaboration.

The cooperation in question must be carried out with government research and development institutions and/or higher education institutions in Indonesia.

Referring to Article 3 paragraph (1) PMK 153/2020, commercialization can be carried out by taxpayers who carry out research and development activities or other taxpayers. If commercialization is carried out by other taxpayers, additional gross income deductions are given to taxpayers who carry out research and development activities.

Commercialization by other taxpayers can be carried out if the taxpayer conducting research and development has fulfilled the 2 provisions stipulated in Article 3 paragraph (3) of PMK 153/2020.

The 2 provisions in question are that taxpayers have obtained the intellectual property in the form of patents or PVP rights and have received income with a value that should have been received from the use of patents or PVP rights from other taxpayers who carry out commercialization. 

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