President Joko “Jokowi” Widodo has issued a regulation on major tax deductions aimed at boosting investment, research and development (R&D) as well as the participation of businesses in improving Indonesia’s human resources.
Under Government Regulation (PP) No. 45/2019 on the calculation of taxed income and expansion of income tax in the current year, which was issued on June 25 and is an amendment of Government Regulation No. 94/2010, taxpayers can enjoy a tax deduction of up to 300 percent.
Under Article 29C of the new regulation, domestic taxpayers who conduct research and development (R&D) in Indonesia could obtain a gross income as high as 300 percent of the cost of their R&D activities.
“The R&D activities [must be] conducted in Indonesia and produce new inventions, innovations, new technology and/or a transfer of technology to develop industries,” reads Article 29C, Paragraph 2 of the regulation.
Meanwhile, Article 29A stipulates that domestic taxpayers who open a new business or expand their existing businesses in labor-intensive sectors could enjoy a net income tax deduction of 60 percent of the capital they invested as fixed assets.
Under Article 20B, local taxpayers who organize working programs, internships and/or educational activities to develop human resources based on a certain competency could obtain a gross income as high as 200 percent of the funds they had spent for the activities.
“The certain competency […] aims to improve the quality of manpower through working practice programs, internships and/or education to create effective and efficient human resources to fulfill the demand of businesses and industries,” reads Article 29B, Paragraph 1 of the new regulation.
Law and Human Rights Minister Yasonna H. Laoly said in a statement published in Cabinet Secretariat’s official website on Tuesday that the regulation had been in effect since it was issued on June 25. (bbn)