DGT Explains The Mechanism Of New Tax Regulations For MSMEs

JAKARTA - The government has issued Minister of Finance Regulation (PMK) Number 164 of 2023 concerning procedures for imposition of income tax on income from businesses received or obtained by taxpayers who have certain gross circulation and business reporting obligations to be confirmed as taxable entrepreneurs.

And it was promulgated on December 29, 2023 and comes into effect on that date.

This PMK is an implementation rule based on Article 57, Article 62, and Article 63 of Government Regulation Number 55 of 2022 concerning adjustment of regulations in the field of income tax and amendments to the regulation of the minister of finance number 197/PMK.03/2013 concerning amendments to the Regulation of the Minister of Finance number 68/PMK.03/2011 concerning restrictions on small entrepreneurs in value added tax.

The Directorate General of Taxes (DGT) of the Ministry of Finance explained that the technique for regulating micro, small and medium enterprise tax (MSMEs) as stated in the Regulation of the Minister of Finance (PMK) Number 164 of 2023.

There are two main things regulated in the PMK, namely technical arrangements for the final PPh of certain gross distribution taxpayers (omzets) and relaxation of the time limit for inauguration as Taxable Entrepreneurs (PKP).

With the issuance of PMK Number 164 of 2023, the Government has made it clear and facilitates various technical provisions regarding the imposition of Final Income Tax for certain turnover taxpayers.

"As stipulated in the previous regulation, MSME taxpayers are subject to a final income tax rate of 0.5 percent or can choose a general tariff based on Article 17 paragraph (1) of the PPh Law," said Director of Counseling on Services and Public Relations of the Directorate General of Taxes Dwi Astuti.

This new regulation further emphasizes the obligation of taxpayers with certain turnovers of up to IDR 4.8 billion per year to pay off the debted Final Income Tax of 0.5 percent of the business turnover for each tax period.

The repayment of the debted Final Income Tax can be deposited by the taxpayer or through a cutting or collection mechanism by other parties.

In the event that the taxpayer transacts with a PPh shear/cover, he must show a certificate so that the final income tax is deducted by 0.5 percent. Meanwhile, specifically for taxpayers, MSMEs who have a turnover of less than IDR 500 million a year, they must submit a statement so that tax deductions are not carried out.

Meanwhile, in this case for taxpayers who choose to be subject to a general tariff of Article 17 paragraph (1) of the PPh Law, taxpayers must first submit a notification to the DGT no later than the end of the tax year and are only subject to income tax based on Article 17 paragraph (1) of the PPh Law in the following tax year.

As for taxpayers who have just been registered, they can choose to be subject to a tariff of Article 17 paragraph (1) of the PPh Law since the tax year is registered by submitting a notification when registering.

"On this occasion, we remind you of the obligation to report Annual SPT for all MSME taxpayers including MSMEs whose turnover is less than Rp. 500 million a year to continue submitting Annual SPT, which may so far these obligations have not been fully implemented," said Dwi.

In addition, the issuance of PMK Number 164 of 2023 also regulates the relaxation of the period of inauguration as a PKP for MSME taxpayers whose turnover has exceeded Rp4.8 billion.

Relaxation is given regarding the deadline for submitting inauguration as PKP.

"In the previous regulation, taxpayers must report their efforts to be confirmed as PKP no later than the end of the following month. With this regulation, we will provide relaxation to the latest end of the financial year concerned", added Dwi.