Thailand
Indonesia: Regulation on R&D tax deductions in development
The Finance Ministry is in the process of writing up regulations for the implementation of tax deductions for research and development (R&D) and labor-intensive industries.
The head of the state revenue department at the Finance Ministry’s Fiscal Policy Agency, Syarif Ibrahim, said in Jakarta on Tuesday that the ministry should carefully formulate the regulations to ensure companies would not use loopholes to avoid paying taxes.
“We have to be careful to avoid a moral hazard,” he told the press. He expressed hope the drafting of the R&D regulation could be completed by next year. Meanwhile, a ministerial regulation on tax deductions in labor-intensive industries will also be issued by year-end.
The tax incentives, which policymakers refer to as super tax deductions, are stipulated in Government Regulation (PP) No. 45/2019 on the calculation of taxable income and income tax payments in the current year, which was issued in June, this year.
Under Article 29A of the regulation, investors who open a new business or expand their existing businesses in labor-intensive sectors are allowed to offset 60 percent of the capital they invest from their taxable net income.
Under Article 29B, companies that provide training programs, internships and/or educational activities to develop human resources in certain competencies can cut the their taxable gross income by up to 200 percent of the funds they spend on the activities.
Meanwhile, under Article 29C of the new regulation, companies that conduct R&D in Indonesia are allowed to cut their taxable income by up too 300 percent of the cost of their R&D activities. Such deductions would significantly reduce their tax payments.
Source: https://www.thejakartapost.com/news/2019/10/23/regulation-on-rd-tax-deductions-in-development.html