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Indonesia optimizes tax incentives for research and development

Business Times - December 6, 2019

A.N. Basil, Thailand – The Indonesian Ministry of Finance announced on Thursday that it has optimized tax incentives for businesses under the research and development segment as part of the government's efforts in improving the overall business environment in the country.

According to Antara, Deputy Finance Minister Suahasil Nazara said that the ministry is expecting that the latest developments will help convince businesses that "conduct research in technology, as well as production" to stay in the country and explore opportunities.

While the ministry acknowledged that it cannot force companies to stay if they are opting out of the Indonesian market, Nazara said the government is hoping that all respective parties work together in creating an investment climate worth holding on to.

Nazara further revealed that the tax incentives can reach up to 300 percent for related businesses and undertakings. The move came amid building trade tensions and a global economic decline that is not expected to recover until next year.

Aside from tax incentives specifically targeted towards research and development assistance, the ministry also rolled out incentives for vocational education and training to help learners in the industry.

Those training under R&D segments can get tax incentives of up to 200 percent of the total costs that companies incur for vocational studies, training, seminars, and related educational programs.

Meanwhile, the Indonesian government also said this week that foreign companies with a significant presence in the country's internet market will now be required to appoint a certain representative for business in the region.

According to the Business Times, foreign firms will also be required to pay all applicable taxes as part of the government's efforts in ensuring that competition laws are upheld and no force is dominant than the other.

Overseas firms that are trading goods or services digitally in the the country will be treated the same as physical companies that are required to pay due to taxes and have a representative who can be contacted or talked to personally if necessary.

Not too many details were given regarding the regulation rolled out on Wednesday but companies that meet a particular set of criteria will be required to adhere to the regulation to keep doing business in the country's internet economy.

In other news, Moody's Investor Services on Wednesday predicted that Indonesia's gross domestic product (GDP) will only expand by 4.9 percent this year and slump down further to 4.7 percent in 2020.

The news came amid a global economic slowdown that has affected countries trading with China and the United States – the two economic giants engaged in a trade war that kicked off last year.

Source: https://www.btimesonline.com/articles/122975/20191206/indonesia-optimizes-tax-incentives-for-research-and-development.htm