"Fiscal support is needed for MSMEs in the priority sectors, for example, MSMEs in the value-added production industry to support downstreaming and to be export-oriented," Head of Center for Digital Economy and SMEs of INDEF Eisha Maghfiruha Rachbini remarked when contacted by ANTARA on Friday.
Rachbini suggested that the next government provide tax incentives to MSMEs according to their capacity and business development phase to drive an increase in the productivity of the business players.
She also supported the plan of President-elect Prabowo Subianto and Vice President-elect Gibran Rakabuming Raka to provide tax exemption for the first two years for newly established and officially registered MSMEs as stated in their Asta Cita missions document.
According to Rachbini, this effort can be an incentive to increase the formalization and legality of MSMEs.
"There are many MSMEs that are still informal. With more formal MSMEs, access to financing, resources, training and capacity building, as well as government facilities for MSMEs' empowerment will increase," she remarked.
In addition to providing tax exemption to newly established MSMEs, Prabowo and Gibran are planning to reduce the income tax to push economic activities to increase the tax ratio.
She assessed that the step could serve as a stimulus for economic growth, especially amid the current declining purchasing power of the community.
Nevertheless, she emphasized that state revenue must still be pushed although the government will later reduce the income tax.
This is because the current tax ratio in Indonesia is still quite low, at around 10 percent, while the Prabowo-Gibran government is targeting to increase the ratio of state revenues to the GDP to 23 percent.
"In order for the tax ratio to increase, tax revenue must be increased, among others, related to tax compliance. It also needs to be balanced with efforts to digitize the tax system," she remarked.
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Translator: Uyu Septiyati, Raka Adji
Editor: Azis Kurmala
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