Government confirms MSME tax facilities remain in effect

The government has emphasised that income tax facilities for micro, small, and medium enterprises (MSMEs) remain in effect, meaning business operators need not worry about circulating information regarding major changes to the sector’s tax regulations. Monica Christina Panjaitan, a Junior Expert Tax Counsellor at the Central Jakarta Regional Office of the Directorate General of Taxes, stated that the government has only made several refinements to enhance the sense of fairness and ensure that facilities are granted to the appropriate parties. “So far, for the MSME sector, there have been no changes. However, there are indeed a few additions. These additions are to provide a sense of fairness,” Monica said during a discussion at the Jakarta Kreatif Festival on Sunday.

She explained that business operators with a turnover or gross revenue of up to Rp500 million per year continue to receive the facility of being exempt from income tax. According to her, this provision is a form of government support so that MSMEs can continue to grow without being burdened by tax obligations in the early stages of their business. Monica reminded business operators that they must keep regular records of their turnover to be able to prove the amount of gross revenue when utilising this facility. “Ladies and gentlemen, do not forget to keep records. Gross revenue per day, per month, must still be recorded to obtain the MSME facility for those under Rp500 million,” she said.

Meanwhile, individual taxpayers and single-member limited liability companies with an annual turnover above Rp500 million up to Rp4.8 billion remain subject to a Final Income Tax of 0.5 percent of gross revenue. Monica noted that this rate is a continuation of the government’s previous policy of reducing the MSME Final Income Tax rate from 1 percent to 0.5 percent as a form of support for the business climate. She added that the government has also removed the time limit for utilising the 0.5 percent Final Income Tax rate for individual taxpayers and single-member companies. Thus, this facility can be utilised as long as the business turnover remains below Rp4.8 billion per year. Monica assessed that this policy demonstrates the government’s continued commitment to supporting MSME growth through simple tax policies while providing certainty for business operators. “Previously, there was a time limit for individual taxpayers. Now, for individual taxpayers and single-member limited liability companies, there is no longer a time limit,” she said.