The Super Tax Deduction policy, is a tax incentive provided by the government for certain industries and business activities. The current Super Tax Deduction policies in Indonesia are as follows:

1. Super Tax Deduction for Vocational Activities, regulated through Minister of Finance Regulation No. 128/PMK.0.10/2019 (MoF Regulation 128/2019)
2. Super Tax Deduction for Research and Development (R&D) Activities, regulated by Minister of Finance Regulation No. 153/PMK.0.10/2020 (MoF Regulation 153/2020)

A. Super Tax Deduction for Vocational Activities

Based on the provisions of MoF Regulation 128/2019, taxpayers get a tax deduction from their company’s gross income up to a maximum of 200% of expenses related to work practices, internships and/or learning activities. The following details the provisions governing this tax incentive:

1. Amount of Tax Deduction
   The 200% deduction as mentioned above consists of the following tax deductions:
   • 100% deduction from the gross income of the actual incurred costs for work practices, apprenticeships and/or learning activities; and
   • Additional deduction of 100% of gross income based on the actual incurred costs for work practices, internships and/or learning activities
2. Terms of Tax Deduction
   Taxpayers can take advantage of tax deductions for activities regulated in MoF Regulation 128/2019 if they meet the following requirements:
   • Have carried out work practices, apprenticeships and/or learning activities related to human resource development based on certain competencies
   • Not in a tax loss position during the financial year in which this facility is used
   • Has submitted a Fiscal Certificate (a letter issued by the Tax Office in connection with the fulfillment of taxpayer obligations during a certain period)

Read More: Notice of Tax Exemption from Income Tax Article 23

B. Super Tax Deduction for Research and Development (R&D) Activities

MoF Regulation 153/2020 stipulates provisions regarding the granting of a tax deduction on gross income for certain research and development activities in Indonesia. The following give details of the provisions on tax incentives for R&D activities:

1. Amount of Tax Deduction
   Taxpayers who carry out certain R&D activities in Indonesia can enjoy tax incentives in the form of a maximum gross income reduction of up to 300% of the total costs incurred for these activities for a certain period of time, the details of the deduction are as follows:
   • Reduction of gross income by 100% of the total costs incurred during R&D activities; and
   • Additional gross income reduction of up to 200% of accumulated costs during R&D activities within the last five tax years
2. Terms of Tax Deduction
   Taxpayers can take advantage of additional deductions for R&D activities if they meet the following requirements:
   • The results of the R&D process produce intellectual property rights in the form of patents or plant variety protection rights (PVP) which are registered at the patent office;
   • R&D activities reach the commercialization stage; or
   • Research and Development that results in patents or PVP rights and/or reaches the commercialization stage, is carried out in collaboration with government R&D institutions and/or higher education institutions in Indonesia

This Super Tax Deduction policy is the government’s step in attracting more competent workers and increasing investment which simultaneously benefits the government in increasing human resources and increasing the amount of intellectual property in Indonesia. As taxpayers, it is important for us to know the existing tax incentives in order to minimize expenses and reduce the burden on our business activities

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ET Consultant is a Business Consultant and Legal Consultant Expert that provides support for local and multinational clients to start and manage their business operations in Indonesia. ET Consultant specializes in Business Incorporation, Licensing & Legal, Accounting & Taxes, Immigration, and Advisory Services.

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