"There is no change, let alone an increase, in taxes for MSMEs. Tax incentives for MSMEs remain the same as before," Maman told a press conference at his office in Jakarta on Wednesday.
He said MSMEs with annual revenue of less than Rp500 million would continue to be exempt from income tax.
MSMEs with annual revenue of up to Rp4.8 billion would also continue to be subject to a final income tax rate of 0.5 percent of gross revenue.
According to Maman, the key change in the new regulation concerns the validity period of the final tax rate, which is no longer subject to a time limit. Previously, the 0.5 percent tax rate was extended on an annual basis, but it has now been made permanent.
"In the past, it was extended every year. Now there is no time limit. This is intended to provide certainty for MSMEs," he said.
The government, however, has introduced adjustments to prevent misuse of the 0.5 percent final income tax facility.
Maman said evaluations conducted over the past several years found cases in which businesses split their operations into multiple entities in order to remain classified as MSMEs and continue benefiting from the preferential tax rate.
Under the new arrangement, individual business owners with annual revenue below Rp4.8 billion will continue to be eligible for the 0.5 percent final income tax rate. For non-individual business entities, including limited liability companies (PT) and limited partnerships (CV), taxation will be based on net profit.
Nevertheless, Maman stressed that PT and CV with annual revenue below Rp4.8 billion will still receive tax incentives in the form of a 50 percent reduction on the standard corporate income tax rate of 22 percent.
"This incentive is intended for businesses with annual revenue below Rp4.8 billion. Once they exceed Rp4.8 billion, it is only fair that they no longer receive the same treatment," he said.
With the policy now made permanent, the government expects MSMEs to gain greater business certainty and continue expanding without being burdened by regulatory uncertainty.
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Translator: Shofi, Azis Kurmala
Editor: Primayanti
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