PPh Final 0.5 Percent For Official MSMEs Extended

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PPh Final 0.5 Percent For Official MSMEs Extended

Friday, 28 Feb 2025

The government has officially extended the validity of the 0.5 percent Final Income Tax (PPh) incentive for micro, small, and medium enterprises (UMKM) with annual revenues between Rp 500 million and Rp 4.8 billion. Meanwhile, UMKM with revenues below Rp 500 million will continue to receive a tax exemption or a zero percent rate. This policy was announced by Minister of UMKM Maman Abdurrahman during a press conference on Economic Policy Package: Accelerating Inclusive and Sustainable Economic Growth at the Coordinating Ministry for Economic Affairs in Jakarta on Monday (December 16, 2024).

"For UMKM with annual sales up to Rp 4.8 billion, a 0.5 percent PPh applies. This means it continues. This policy, which has been in place for seven years, aims to support UMKM in their growth and independence," Maman stated, as reported by Antara.

Extension for Growth Maman explained that UMKM benefiting from the 0.5 percent Final PPh incentive for seven years will receive an additional year of extension until the end of 2025. For those who started using this incentive two years ago, they are still eligible for this benefit for the next five years according to Government Regulation No. 55 of 2022.

"The additional year of incentive is for UMKM that have been under the 0.5 percent PPh for seven years. Those who started two years ago can enjoy it for five more years. If they just started one year ago, they can benefit for up to six years," Maman clarified. VAT Incentives for Small Businesses In addition to the PPh extension, the government is also providing a Value Added Tax (PPN) exemption for small businesses with annual revenues not exceeding Rp 4.8 billion. Maman revealed that the projected PPN incentive for next year is Rp 265.6 trillion, with 90 percent of this amount benefiting UMKM.

The exemption of VAT on essential goods like rice, fish, and meat greatly supports small and medium enterprises (SMEs), especially in the culinary sector, in running their businesses, said Maman. Encouragement for Independence Despite many incentives available, Maman continues to urge SMEs to grow and be self-reliant. "Even with numerous government incentives, we want to encourage SMEs not to become complacent or feel too comfortable with the support provided. We hope that SMEs will keep innovating and pursuing entrepreneurship more independently," he stated. This initiative aims to boost the growth of SMEs in Indonesia and strengthen their role in promoting an inclusive and sustainable economy.

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