IP royalties paid from Indonesia to Singapore public for various reasons. One is that Singapore is the basis for regional investment so that the parent company tends to be located in Singapore, covering South Asia. Another is that foreign companies operating in the countries of SE Asia face other restrictions (limitation of ownership, higher corporate taxes, etc.) that might make the IP royalty a useful structural tool. A third is that the investment vehicles that own assets within the jurisdiction of a strong IP is easier to attract VC and other financing options, even direct sales.
Royalties however attractive tax deductions when they are paid off. There are different prices for different types of IP. Rules are defined under the Tax Treaty Indonesia Singapore-double; Indonesia and Singapore signed a new tax treaty on 4 February 2020 to replace the 1990 tax treaty between the two countries. Ratification is underway and it should be fine by the end of 2020; which means the time for companies to start planning now.
Under the new agreement tax deductions for royalties will be lowered from 15% to new rates either 10% or 8%, depending on the type of royalties:
10%, for copyrights, patents, trademarks, designs or models, trade secrets; and 8%, for the use or right to use, industrial, commercial or scientific equipment, or know how.
So the ‘classic’ IP royalties (eg copyright license or trademark) attracted 10%. physical equipment is 8%. Of great interest will be trade secrets and know how to rule, which could create a whole new category of licensable rights, which is currently quite negligible in the transaction.
Both countries apply the credit method for the elimination of double taxation. This means that Singapore should credit the withholding tax against income tax paid the owner of the IP Singapore, Singapore (a 17% corporate income tax rate has been reduced to an effective reasonable 7%, then to the IP royalties).
Furthermore, one could ask IP lawyer indonesia or Ip law consultant for matters regarding Ip royalty in Indonesia.