Ministry of Finance Accelerates Revision of Final Income Tax Scheme for MSMEs

The Ministry of Finance (Kemenkeu) is currently preparing revisions to Government Regulation No. 55 of 2022 concerning Adjustments to Income Tax Regulations (“PP 55/2022”) in order to permanently implement the final Income Tax (“PPh”) scheme for micro-, small-, and medium-scale enterprises (“MSMEs”) applicable to individual taxpayers and corporate taxpayers in the form of sole-proprietorship. The proposed regulation will also introduce new provisions aimed at preventing the misuse of the scheme for tax avoidance purposes.

“We will ensure that the process is expedited, because there should no longer be any obstacles to issuing it this year,” said Minister of Finance Purbaya Yudhi Sadewa.

Currently, the utilization period for the MSME final income tax scheme, which imposes a 0.5% tax rate on gross turnover, is limited to 7 fiscal years from the date an individual taxpayer is registered. Meanwhile, for sole-proprietorship, the utilization period for the MSME final income tax scheme is limited to 3 fiscal years from the taxpayer’s registration date.  

The draft revision to the Government Regulation has been submitted to the Presidential Palace since last year.