President Joko Widodo (Jokowi) has just authorized the relaxation and exemption of Income Tax (PPh) obligations for workers and MSMEs.
The rules regarding the easing and exemption of taxes for workers and MSMEs are contained in the Law (UU) on Harmonization of Tax Regulations (HPP) and are derived from Government Regulation No. 55 of 2022 concerning Adjustments to Regulations in the Income Tax Sector.
From this regulation, workers whose salaries are below IDR 4.5 million per month are not taxed because they are below the limit of Non-Taxable Income (PTKP). Meanwhile, the current PTKP remains Rp4.5 million per month or Rp54 million per year.
Thus, those subject to tax are workers whose income is above the PTKP. For example, workers with a salary of Rp4.6 million and above are definitely taxed every year although the rate is not as high as people with higher incomes.
Groups that continue to pay income tax (PPh)
The following is a breakdown of the tax rate for workers with income above PTKP:
- Income of IDR60 million subject to 5% rate
- Income of IDR60 million – IDR250 million subject to 15% rate
- Income of IDR250 million – IDR500 million subject to 25% rate
- Income of IDR 500 million – IDR 5 billion subject to 30% rate
- Income of IDR5 billion and above subject to 35% rate
Jokowi’s new regulation also regulates taxes for traders whose businesses are run by themselves or individual MSMEs. For example, warteg, coffee shop, and warmindo traders with a maximum turnover of IDR 500 million per year are eligible.
Before this regulation was passed, all individual MSME players were taxed because there was no regulation on the limit of turnover subject to tax. For example, MSME income is only IDR 50 million per year, still subject to 0.5% final income tax.
However, with the latest regulation, namely the Law on Harmonization of tax regulations that has just been passed, individual MSMEs only need to pay taxes if the annual turnover is above IDR 500 million.
Yes, as is known, the ratification of regulations regarding tax exemptions for MSMEs in the Jokowi administration era is not the first time. Previously, in 2020 Jokowi had also given tax freedom to MSME players with a turnover below IDR 4.8 billion per year.
This aims to ease the economic conditions of MSME players in the midst of the Covid-19 pandemic. The hope is that with this tax exemption assistance, MSME players can still survive in difficult times.
Not only that, the rules regarding tax exemptions for workers and MSME actors at certain income limits are also intended to create equitable distribution of public welfare.
Where, certain tax objects and subjects can contribute more tax than others and the proceeds of the tax levy are then used to provide facilities for the underprivileged so as to reduce social inequality.
Therefore, for taxpayers who have been charged with certain taxes in accordance with their respective regulations, it is necessary to fulfill their obligations. Especially for entrepreneurs, paying taxes helps smoothen their business operations.
Not only paying, but also complying with all tax obligations, starting from having an NPWP, collecting or deducting taxes from every transaction that occurs, as well as reporting and paying business taxes.
KH Friend Don’t Forget to Pay Taxes!
Carrying out tax obligations is proof that the business entity is an obedient taxpayer so that it can facilitate the ongoing business process and increase business credibility.
To help with tax management for your business or business entity, you can leave it to Kontrak Hukum! We have a Digital Business Assistant(DiBA) service that can help you with taxation.
It is certainly easier and more efficient to calculate taxes with DiBA Contract Law than having to do it yourself or using a firm. Not only that, for KH friends whose businesses need legal, accounting, and marketing services can also take care of it at once in the DiBA Contract Law service, you know!
Interested in trying DiBA Contract Law services? Visit https://kontrakhukum.com/digital-assistant/. If you have further questions regarding taxation or other legal needs, you can also contact Kontrak Hukum via the Ask KH link.
