We need to evaluate the policy and observe the current economic trend before deciding the extensionJakarta (ANTARA) - The Finance Ministry is considering extending the tax incentives program for micro, small, and medium enterprises (MSMEs), offered under the COVID-19 national economic recovery scheme, in 2022.
"We need to evaluate the policy and observe the current economic trend before deciding the extension, yet if the ministry proceeds with the tax incentives extension, we still have a spare budget that can be used for MSMEs' benefit," the Finance Minister's special staff for strategic communication, Yustinus Prastowo, informed at an online dialogue in Jakarta on Thursday.
Under the government's national economic recovery scheme, enacted during the COVID-19 pandemic, MSMEs have been exempted from the obligation to pay income tax of 0.5 percent of the company's revenue, he informed.
Despite the planned tax incentives, Prastowo reminded that the recently-ratified Tax Regulation Harmonization Law exempts MSMEs earning less than Rp500 million (around US$35 thousand) in revenue from income tax obligations.
The law also provides a 50-percent corporate income tax discount -- currently pegged at 22 percent of the revenue -- to MSMEs earning more than Rp500 million in revenues, he added.
"Article 31E of the law stipulates that MSMEs that report more than Rp500 million revenues will have their corporate income tax obligation reduced to 11 percent," he said.
As the government is already helping MSMEs to continue their activities amidst the COVID-19 pandemic, Prastowo expressed the hope that MSMEs will utilize the opportunity to develop their business and comply with their tax obligations.
He also praised the law for relaxing tax regulations and providing clarity on legal and administrative requirements that will be more convenient for taxpayers.
The Finance Ministry will coordinate with the Investment Ministry to assess the tax incentives scheme and conceive stimulus plan revitalization, if needed, Prastowo said.
"By coordinating with another ministry, we could determine whether the current incentives model is feasible or needs improvement to ensure greater competitiveness and benefits for Indonesia," the expert staff added.
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Translator: Agatha Olivia V, Nabil Ihsan
Editor: Sri Haryati
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