The application of the MSME Income Tax rate of 0.5% can be utilized by domestic individual or corporate taxpayers with the condition that the gross turnover (turnover) does not exceed IDR 4.8 billion in 1 (one) tax year. Government Regulation Number 55 of 2022 is an improvement and replacement of Government Regulation Number 23 of 2018. There are several adjustments related to the imposition of Final Income Tax on income from businesses for taxpayers with certain gross turnover. Based on the provisions stated in Government Regulation Number 55 of 2022, several forms of business entities that can utilize the final income tax rate 0,5% include:
1. Cooperatives engaged in trading, service, or production businesses with a turnover not exceeding IDR4.8 billion per year can use the 0.5% final income tax rate.
2. Limited Partnerships (CVs) operating as micro, small, and medium enterprises are also eligible to use this rate. This encourages legality and tax compliance among small businesses.
3. Firms established by two or more people and running productive business activities can utilize this MSME rate as long as their turnover is within the stipulated limit.
4. Village-Owned Enterprises (BUMDes) BUMDes engaged in managing village potential can enjoy this tariff as an incentive to improve local economic performance.
5. Business entities in the form of individual companies (owned by only one person) have the opportunity to utilize the 0.5% tariff. This is in line with the government’s efforts to facilitate legalization and ease of doing business for individuals.
6. Limited Companies (PT) with turnover below IDR4.8 billion are also entitled to this rate, but only for a period of 3 years from registration as a taxpayer.
Based on Government Regulation Number 55 of 2022 Article 59, the period of imposition of the 0.5% final income tax rate for individual taxpayers is 7 (seven) years. Then for corporate taxpayers in the form of cooperatives, partnerships, firms, village-owned enterprises, or individual companies established by one person for 4 (four) years. And the last for corporate taxpayers in the form of limited companies for 3 (three) years. The period starts from the time the taxpayer is registered. For taxpayers registered after 2018, the calculation starts from the date of registration. As for taxpayers registered before 2018, the period is calculated from 2018.
Taxpayers who have gross turnover of up to Rp500,000,000 (five hundred million rupiah) in 1 (one) tax year, are not subject to income tax. If the gross turnover in the current tax year has exceeded Rp4,800,000,000 (four billion eight hundred million rupiah), it is still subject to income tax rate 0,5% until the end of the relevant tax year.
By Olina Rizki Arizal – Partner Tbrights
Tbrights is a tax consultant in Indonesia which is currently an integrated business service in Indonesia that can provide comprehensive tax and business services
Reference:
1. Government Regulation Number 55 Year 2022 on Adjustment of Regulations in the Income Tax Sector
