The government has established a national strategy to accelerate stunting prevention, involving various stakeholders, including the private sector. Preventing stunting requires cross-sectoral interventions, including adequate nutrition, vitamin and animal protein intake, and access to clean water and sanitation, particularly during the first 1,000 days of life. Through corporate social responsibility (CSR) programs, companies can support these efforts by providing nutritious food, nutritional assistance, and sanitation facilities tailored to the needs of target communities.
However, tax-related constraints continue to limit private sector contributions. Under commercial accounting standards, CSR expenditures are recorded as expenses that reduce profits in the current period. Under tax regulations, however, expenses are deductible from gross income only if they meet the applicable requirements. Article 6(1) of the Income Tax Law stipulates that deductible expenses must be related to earning, collecting, and maintaining income. This means CSR expenditures on food assistance, nutritional supplements, or sanitation support do not automatically qualify as tax-deductible expenses.
Another constraint lies in Article 9(1)(g) of the Income Tax Law, which generally prohibits deductions for aid, donations, and grants, except for specific types of expenditure expressly permitted under applicable legislation. Government Regulation No. 93 of 2010 further stipulates the categories of donations deductible from gross income. These cover five areas: national disaster relief, research and development, educational facilities, sports development, and social infrastructure development.
Donations for stunting prevention and management are not included in these categories. Consequently, CSR expenditures for these purposes are generally not deductible from gross income. Companies must make a positive fiscal adjustment by adding these expenses back when calculating taxable income. This treatment may reduce companies' financial incentives to fund stunting prevention programs.
To broaden and strengthen private sector participation, the government should consider revising Government Regulation No. 93 of 2010 to include donations for stunting prevention and management, including nutritional and food assistance, as deductible expenses. Such a policy would strengthen financial incentives and provide greater legal certainty for businesses supporting efforts to reduce stunting prevalence. Its implementation would need to be accompanied by clear eligibility criteria and oversight mechanisms to ensure assistance reaches the intended beneficiaries.
The deduction facility could be subject to strict administrative requirements, as further stipulated in Minister of Finance Regulation No. 76/PMK.03/2011 and its amendments. These requirements include channeling donations through authorized agencies or institutions, clearly identifying beneficiaries, and documenting how the funds are used. In addition, the maximum deductible amount is capped at 5% of the taxpayer's net fiscal income in the preceding tax year.
Companies must also ensure that the donations do not result in a fiscal loss in the current tax year, that no special relationship exists between the donor and recipient, and that valid proof of receipt is available. For donations of goods produced by the company, the value of the donation is calculated based on the cost of goods sold (COGS).
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Writer: Arianta John Bangun | Editor: Thomas Rizal
