Vocational and R&D in IKN Eligible for Up to 350% Supertax Deduction

JAKARTA, DDTCNews - The government offers tax incentives in the form of a supertax deduction for resident taxpayers organising and/or involving human resources in educational and vocational activities in Nusantara Capital.

Referring to Article 42 of Government Regulation (Gov. Reg.) Number 12/2023, taxpayers are entitled to a maximum gross income reduction of 250% of the costs of externships, internships and/or apprenticeships.

“The competence for externships, internships and/or apprenticeships referred to in paragraph (1) shall be determined by the Head of the [IKN] Authority,” reads Article 42 paragraph (5) of Gov. Reg. 12/2023, quoted on Wednesday (8/3/2023).

To obtain the vocational supertax deduction in IKN, taxpayers must first apply through the online single submission (OSS) system. These incentives are provided by the government until 2035.

IKN also offers research and development (R&D) supertax deduction incentives. Resident corporate taxpayers performing R&D in IKN are entitled to a maximum gross income reduction of 350% of R&D costs.

Certain research and development are research and development that produce inventions, develop innovations, control new technologies or transfer technologies for industrial development to increase the competitiveness of national industries.

To obtain the incentives, the taxpayers must apply through the OSS system. The R&D supertax deduction incentives in IKN are granted until 2035.

Provisions on the subjects, forms of the incentives and criteria for eligibility, the forms of eligible activities, the types of eligible costs, procedures for the application for approval, criteria for revocation and period of the granting will be further stipulated in a minister of finance regulation  (MoF Reg.).

On a side note, the supertax deduction incentives outside IKN have been regulated in Gov. Reg. 49/2019. Under this regulation, taxpayers organising vocational activities are entitled to incentives in the form of a reduction in gross income of a maximum of 200% of the total costs incurred for externships, internships or apprenticeships.

On the other hand, taxpayers performing R&D are entitled to a maximum gross income reduction facility of 300% of R&D costs. (rig)