Extension of Final Income Tax 0.5% Granted, UMKM Can Save

The government continues to show its commitment to maintaining Indonesia's economic resilience amid global economic challenges. In a limited meeting earlier this week, President Prabowo Subianto and his staff discussed a number of measures to support the real sector, especially micro, small and medium enterprisesUMKM).

During the meeting, a number of policies were agreed upon. These included the continuation of fiscal incentives, support for labor-intensive industries, as well as the strengthening of the tourism sector and labor protection programs.

One of the important points discussed was the final income tax (PPh) for UMKM players. The Coordinating Minister for Economic Affairs, Airlangga Hartarto, said that the government set an extension of the final income tax rate of 0.5% for UMKM with a turnover of up to IDR 4.8 billion per year.

This policy is no longer extended on an annual basis, but is given certainty until 2029.

"With this policy, UMKM players get certainty in their business planning. This year, a budget of Rp 2 trillion has been allocated, with the number of registered taxpayers reaching 542,000 businesses," said Airlangga.

He explained that the government is preparing a revision of government regulations to strengthen the legal basis of the policy.

This step is expected to maintain the spirit of small businesses amidst the rapid and uncertain changes in the global economy.

Based on the ministry's data, currently, there are 542,000 UMKM registered as taxpayers and utilizing the UMKM final income tax scheme.

For UMKM players whose turnover is a maximum of Rp 4.8 billion a year, they can take advantage of the 0.5% income tax rate facility. "This policy is to encourage the growth of UMKM so that they continue to grow rapidly," he said in a press conference.

Airlangga added that the government has prepared a budget related to the tax incentive extension policy. The extension of the 0.5% Final Income Tax utilization period will be regulated through a revision of government regulations (PP).

In accordance with Article 59 of PP 55/2022, the period of imposition of the 0.5% Final Income Tax rate for individual taxpayers is seven years.

Positive response from business actors

This latest tax policy has received a positive response from UMKM players. One of them is the owner of WIZZ Sausage, Santi Krisantina.

According to Santi, the government currently cares about the sustainability of UMKM. The ease of the final income tax facility of 0.5% can ease the burden on UMKM players.

"As long as government policies support UMKM, I support 100% because UMKM are the backbone of the economy," he told SUAR in Jakarta (16/9).

Founder of Wizz Abon Sapi and Ayam, Santi was met at the Strengthening Branding and Packaging Program for UMKM Food Products (Photo: Harits Arrazie / SUAR)

Santi said that so far, the burden on UMKM players has been quite heavy, starting from employee salaries, renting space, and buying raw materials.

"With the income tax relief from the government, UMKM players can save expenses," he said.

He asked the government, especially the Directorate General of Taxes, to provide socialization to UMKM players on how to pay taxes correctly. Because, there are still many UMKM players who are confused due to administrative problems.

WIZZ Sausage is a premium chicken sausage brand from Meraki Cipta Rasa, known for its healthy composition, without preservatives, artificial colors, and MSG, and has halal certification.

This product is made from selected raw materials, such as fresh chicken and the best spices, with various flavors, such as original, blackpepper, and basil.

Meanwhile, economist at the Institute for Economic and Community Research (LPEM), Faculty of Economics and Business, University of Indonesia, Teuku Riefky, said that the 0.5% final income tax policy for UMKM players has a positive impact but is not too significant.

According to him, UMKM players face many problems. Not only tax issues, but also licensing issues. They also experience limited digital access and literacy and lack connections to large industries.

"This income tax relief is good enough for UMKM. But this is only one relief they get. There are still many other problems in the field," he told SUAR in Jakarta (16/9).

Teuku explained that the government should be able to encourage the growth of UMKM in a more real way, such as helping access to financing and assisting them in digital promotion.

"UMKM are the backbone of the economy, so their role must be protected," he said.