Non-Taxable Turnover for Individual MSMEs per Gov. Reg. 55/2022

JAKARTA, DDTCNews – Gov. Reg. 55/2022 outlines provisions for the exemption from final Income Tax on a turnover of up to IDR500 million of MSME individual taxpayers.

As is known, according to the changes in the Income Tax Law through the Harmonisation of Tax Regulations Law, individual taxpayers with a certain gross turnover – previously regulated under Gov. Reg. 23/2018 – are not subject to Income Tax on the fraction of turnover up to IDR500 million in 1 tax year.

“Individual taxpayers that have a certain gross turnover [not exceeding IDR4.8 billion in 1 tax year] ... , for the fraction of business gross turnover of up to IDR500 million in 1 tax year are not subject to Income Tax,” reads Article 60 paragraph (2) of Gov. Reg. 55/2022, quoted on Monday (26/12/2022).

The fraction of the gross turnover of the business of up to IDR500 million not subject to Income Tax is calculated cumulatively. The cumulative calculation is carried out from the first taxable period in a tax year or a fraction of the tax year.

The gross turnover constituting the tax base and the total business gross turnover cumulatively calculated are remunerations or the value of the considerations in money or the value in money received or accrued from business, before deducted by sales discounts, cash discounts and/or similar discounts.

For such individual taxpayers, the final Income Tax value is calculated by multiplying the rate of 0.5% by the tax base after taking into account the fraction of the business gross turnover not subject to tax.

The Elucidation of Article 60 paragraph (5) of Gov. Reg. 55/2022 contains a sample case of the imposition of final Income Tax for MSME individual taxpayers as follows:

Mr. R is an individual Taxpayer newly registered in January 2022, owns an electronics store business and fulfils the conditions to be subject to final Income Tax pursuant to the provisions under Gov. Reg. 55/2022 The calculation of Income Tax that Mr. R must self-pay in the 2022 tax year is as follows:

Mr. R is subject to final Income Tax pursuant to the provisions under Gov. Reg. 55/2022 for the fraction of business turnover exceeding IDR500 million in 1 tax year. (kaw)