DGT Reviews Tax Incentive Extension for MSMEs

Tuesday, 14 July 2020

DGT Reviews Tax Incentive Extension for MSMEs

JAKARTA. The Directorate General of Taxes (DGT) is studying the extension of the time of government-borne (DTP)  income tax (PPh) incentives for Micro, Small and Medium Enterprises (MSMES). The extension will be carried out from the previous period until 30 September 2020, as stated in the Minister of Finance Regulation (PMK) number 44 / PMK.03 / 2020 until 31 December 2020.

Citing, the tax authority is currently considering several things, such as the ideal time period including evaluating the implementation of incentives so far. One of them is the absorption rate of facilities which is still considered relatively low.

Based on DGT data as of 10 July 2020, from 2.3 million MSME taxpayers who pay final income tax in 2019, only 201,000 have used this facility with an incentive value of IDR 129 billion from a total budget of IDR 2.4 trillion.

Previously, the providing of MSME final income tax incentive borne by the government aimed at mitigating the impact of Corona Virus Disease 2019 (Covid-19) on the MSME sector. So they do not need to pay a final income tax of 0.5% of total income.This policy is part of the National Economic Recovery (PEN) Program.

Quoting, from 60 million MSMEs in Indonesia, 70% or around 43.2 million MSMEs have been affected by the Covid-19 pandemic. The impact perceived by MSMEs varies, ranging from stopping its operational activities, drastically decreasing turnover, to capital difficulties.

To encourage the absorption of MSME final income tax incentive, the government will increase socialization and provide assistance. Regarding how to get this facility has been stated in PMK number 44 / PMK.03 / 2020.

Then, what must be done by MSME taxpayers is submitting an application for a Certificate of Meeting the Criteria as a MSME Taxpayer online, as stipulated in Government Regulation (PP) number 23 of 2018. Including for taxpayers who already have a Certificate as per Government Regulation (PP) No. 23 before this facility is issued, must re-submit it.

After having a PP 23 certificate, MSME taxpayers only need to use the facility and submit a report on the realization of the use of the facility every month, the maximum of the 20th the following month. The realization report can be uploaded through the system available on the DGT website by adding the billing code attachment.


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