In February 2023, the Indonesian government, through the Ministry of Finance, issued Ministerial Regulation (PMK) Number 153 as a follow-up to Government Regulation Number 45. PMK-153 introduces new tax incentives for companies engaged in research and development (R&D) activities in Indonesia.
The primary facilities offered include a cost deduction of up to 300%, comprising 100% of the actual costs incurred in the respective year and an additional maximum deduction of 200%. This additional deduction can be obtained through the achievement of intellectual property rights, including patents or plant variety protection (PVP), and the commercialization stage.
Furthermore, companies can enjoy an additional 25% deduction if R&D collaboration is undertaken with government R&D institutions or universities in Indonesia. It is important to note that the commercialization stage can be carried out by other companies; however, the additional deduction will still be enjoyed by the company conducting the R&D activities, provided certain requirements are met.
Regarding patents or PVP, companies engaged in R&D must register these rights in their own name or jointly with other companies if R&D is conducted collectively. Transactions involving patents or PVP before the end of the protection period will result in the additional deduction enjoyed being treated as taxable income.
The 200% additional deduction is applied to eligible costs in the last five years from the registration of patents or PVP or reaching the commercialization stage. Claims for additional deductions can be filed starting from the registration or commercialization year, with a maximum limit of 40% of the taxable income for that year. If it exceeds this limit, it can be deferred to the following fiscal year.