Gov’t to Provide Fiscal Incentives to Encourage Business Entities for Research Collaboration
Date 17 November 2020
The Indonesian Government has pushed for participation of business sector in research and development through the provision of fiscal incentives.
“The Government continues to encourage bigger participation of the business sector in conducting R&D activities to increase its competitiveness. The Government is also committed to encouraging the R&D activities by preparing fiscal incentives for industry,” Minister of Research and Technology/Head of the National Research and Innovation Agency Bambang PS Brodjonegoro said during information dissemination on Minister of Finance Regulation (PMK) Number 153 of 2020, Thursday (12/11).
For the record, the Government on 9 October 2020 issued Regulation of Minister of Finance Regulation Number 153 of 2020 on the Granting of Gross Income Deduction for Certain Research and Development Activities in Indonesia.
“One of the goals is to increase the contribution of business entities in conducting R&D activities in order to produce innovative products through collaboration with several parties, such as research institutions and universities,” the Minister said.
The private sector, the Minister added, is also expected to play a role in awakening the spirit of R&D and to increase collaboration between industry players and researchers.
“This is so that the benefits from the R&D results can support industrial production and can be felt by the community,” he added.
Bambang also stated that one of the obstacles in the implementation of research activities in Indonesia is the limited budget, adding that the portion of the R&D budget allocation still heavily relies on the Government and the issue of insufficient budget must be resolved together.
“Approximatelt 80% of R&D funding in Indonesia currently comes from the State Budget, while 20% comes from the industry. This is in contrast to Singapore and South Korea where 80-84% of the budget came from their industry. The private sector needs the push to contribute more in R&D activities,” the Minister stated.
Based on PMK Number 153 of 2020, taxpayers who carry out certain R&D activities in Indonesia can be given a deduction in gross income of 100% of the total costs incurred for these activities.
From the results of activities carried out in collaboration with Government R&D Institutions and / or Higher Education Institutions in Indonesia that produce patents or Plant Variety Protection (PVP) rights and commercialization, taxpayers also receive an additional gross income deduction of up to 200% of the accumulated costs incurred for R&D activities within a certain period.
“Through this fiscal incentive, the Government encourages industry to make inventions, to master new technology, and / or to transfer technology for industrial development as well as to increase the competitiveness of national industries. In addition, the policy of giving tax incentives to industries that allocate their budgets for R&D activities carried out in Indonesia is expected to increase domestic inventions and innovations,” he said. (Ministry of Research and Technology PR/UN)
Translated by: Fairuzzamani Inayatillah
Reviewed by: M. Ersan Pamungkas