Government Allocates IDR 265.6 Trillion For 12 Percent VAT Incentives, Maman: 90 Percent Enjoy MSMEs

Minister of Micro, Small and Medium Enterprises (MSMEs) Maman Abdurrahman. (Mery Handayani / VOI)

JAKARTA - The government has allocated IDR 265.6 trillion for a 12 percent Value Added Tax (VAT) incentive. This policy was taken as an effort to protect people's purchasing power and micro, small and medium enterprises (MSMEs).

Minister of MSMEs Maman Abdurrahman revealed that of the total incentives of IDR 265.6 trillion, 90 percent of which were enjoyed by Indonesian MSMEs.

"The total incentive for VAT exemption submitted by Mrs. Sri Mulyani, there is approximately Rp. 265 trillion, 90 percent of which is enjoyed by MSMEs," he said at a press conference at the Coordinating Ministry for the Economy Office, Jakarta, Monday, December 16.

Maman said for MSMEs with a business turnover of IDR 4.8 billion per year, the government provides an extension of the final PPh validity period of 0.5 percent. This incentive is for 7 years, meaning that if MSMEs have only received this incentive for 2 years, it means that they will still get the opportunity for the next 5 years.

"That is subject to 0.5 percent PPH. This means that this is continued. So this is a policy that yesterday has been running for approximately 7 years. That is actually the goal of providing guidance to our MSMEs so that at the beginning they are given assistance incentives in the hope that after 7 years they can be independent," he explained.

Furthermore, Maman said that for MSME players who had enjoyed this incentive for 7 years, the government provided an additional one year.

"So we'll give them an additional one year until the end of 2025 so that we still give them the opportunity to prepare themselves, advance to class, and grow," he said.

Meanwhile, continued Maman, MSMEs with turnovers below Rp. 500 million per year are fully exempt from VAT. Such as rice traders, to warteg stall entrepreneurs.

"But for MSMEs whose sales are below 500 million, they are subject to 0 percent PPH. So they are not given any burdens at all. For example, for example, traders are free. Street vendors, warteg, all kinds of sales are under 500 million," he explained.