DJP Clarifies Criteria for Final Income Tax Recipients for MSMEs

Jakarta (ANTARA) - The Directorate General of Taxes (DJP) at the Ministry of Finance has refined the provisions regarding Final Income Tax (PPh Final) for micro, small, and medium enterprises (MSMEs) by clarifying the criteria for recipients, aiming to make the tax incentives more targeted.

Monica Christina Panjaitan, a Junior Tax Counsellor at the DJP Central Jakarta Regional Office, stated that the government’s changes do not eliminate the MSME tax facility but rather clarify several provisions that were previously considered too broad. “Essentially, MSME business operators need not worry. The new regulation merely adds several specific criteria to provide more detail,” she said during a discussion at the Jakarta Creative Festival on Sunday.

She explained that the refinement includes a more detailed grouping of income types. The government now distinguishes between income from business activities, independent work, and other domestic income, so that the application of the Final PPh rate is more aligned with the taxpayer’s characteristics. According to Monica, this step is part of an evaluation of the MSME Final PPh policy that has been in place for several years. “Previously, it was very broad. The old regulation was issued as a learning phase before we could apply the actual rate,” she said.

In addition to clarifying income classifications, the government has also amended several provisions in Government Regulation Number 55 of 2022. Monica explained that the changes include expanding the subjects of the 0.5% Final PPh to now cover individual taxpayers, individual companies, and cooperatives. The government has also added exceptions for certain subjects, adjusted the method for calculating gross turnover as a requirement for using the facility, and removed the time limit for utilising the Final PPh rate for individual taxpayers and individual companies.

Monica added that the refinement also aims to provide a sense of fairness, particularly for business operators who no longer meet the MSME criteria and therefore can no longer utilise the facility. “This addition is to provide a sense of justice. So, if a business is no longer categorised as an MSME, it will naturally be unable to use this facility,” she said. She added that the government maintains a policy direction that favours MSMEs, as evidenced by the continuation of the 0.5% Final PPh rate, which was previously reduced from 1% under earlier tax policies.