The Indonesian Government is planning to introduce super tax deductible incentive to encourage the development of human resource quality in Indonesia. By introducing this incentive, the Government hopes that businesses and industries will increase the education/training programme quality for their human resources, which in turn which will increase their competency and productivity in their respective fields. From another aspect, this incentive is a form of anticipation from Indonesian Government to face the industrial revolution 4.0.
This incentive will be provided to industries who organize vocational education programme and perform research and development which results in innovation. For example, companies who have established an education and training centre which provides vocational training programme for high school (Sekolah Menengah Kejuruan/SMK), which includes providing internship activities.
Taxpayer who are entitled to enjoy this incentive will be allowed to claim deductions on their expenses for more than 100% which will result in lowering the income tax payable amount. For example, if a company spends an expense of IDR 100 million on activities which are subject to super tax deductible, such taxpayer will be allowed to claim higher deduction when calculating the taxable income. This super tax deductible scheme has also been previously introduced in Malaysia, Singapore, Japan, etc.
From a timeline perspective, the Government hopes that the relevant taxpayers will be able to enjoy this incentive by second semester of 2019. However, this will depend on how soon the Government will be able to issue the regulation giving clarity on who, how and when taxpayers can access this facility.