DGT’s Explanation of 0.5% Final MSME Income Tax Applies Per Tax Year

JAKARTA, DDTCNews - The Directorate General of Taxes (DGT) reminds taxpayers of the provision on the 0.5% final Income Tax for turnover above IDR500 million for MSMEs.

The threshold treatment for a gross turnover that is not subject to 0.5% final Income Tax of up to IDR500 million is per tax year. This implies that for the 2023 tax year, the IDR500 million threshold is recalculated from the start instead of continuing the turnover calculation from the 2022 tax year.

“If the January 2023 period has not exceeded IDR500 million, 0.5% final Income Tax will not be imposed,” said the DGT contact centre when answering questions from netizens, Friday (3/3/2023).

The provisions on the imposition of 0.5% final Income Tax are stipulated in Government Regulation (Gov. Reg.) 55/2022 as the amendment to Gov. Reg. 23/2018. Individual MSME taxpayers that have utilised the final MSME Income Tax scheme since 2018 remain able to use this scheme until 2024.

Pursuant to Article 59 paragraph (1) of Gov. Reg. 55/2022, individual MSME taxpayers may take advantage of the final Income Tax scheme for a maximum of 7 tax years. If an individual taxpayer is registered before the enactment of Gov. Reg. 23/2018, the final MSME Income Tax may be utilised until the expiration of the period referred to in Article 5 of Gov. Reg. 23/2018.

“Even with the existence of this Gov. Reg. [Gov. Reg. 55/2022], the certain period for the imposition of final Income Tax will continue the period pursuant to Gov. Reg. 23/2018 or will not be reset from the beginning,” wrote the Directorate General of Taxes (DGT) in its official statement.

Eventually, individual MSME taxpayers that have utilised the final MSME Income Tax scheme since 2018 will no longer be able to use the scheme in 2025. Moreover, individual MSME taxpayers will no longer be able to take advantage of the tax burden turnover incentive of IDR500 million which has only been effective as of last year.

Nevertheless, individual MSME taxpayers may continue to use deemed profit (NPPN) in fulfiling their tax obligations. (sap)