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  • Maulana Ibrahim & Gabriel Muara Thobias

Small and Medium Enterprises (SME) Final Income Tax



The government imposes an SME Final Income Tax to taxpayers who have a certain gross turnover for a certain period of time. The enactment of this rule is intended to encourage the public to participate in economic activities by providing convenience and equality to SME actors in carrying out their tax obligations.


Tax Subject


Taxpayers who have a certain gross turnover that are subject to the SME Final Income Tax are:

  1. Individual taxpayers;

  2. Corporate Taxpayer in the form of

  3. Limited Partnership (CV) and firms based on the Commercial Code;

  4. Limited Liability Company (PT) based on Law Number 40 of 2007 Regarding Limited Liability Companies, along with its implementing regulations; and

  5. Cooperatives based on Law Number 25 of 1992 Regarding Cooperatives, along with its implementing regulations,

who receive or earn income with a gross turnover up to IDR 4,800,000,000.00 (four billion eight hundred million rupiah) in the last 1 (one) Fiscal Year prior to the Fiscal Year concerned.


The gross turnover above is determined based on the overall gross turnover of the business, including the gross turnover of branches. In the event that the individual taxpayers are husband and wife, the gross turnover is determined based on the combined business gross turnover of the husband and wife.


The following are the criteria for taxpayers who are not subject to SME Final Income Tax:

a. Individual Taxpayers who earn income from services in connection with the following independent work:

  • experts who do independent work, consisting of lawyers, accountants, architects, doctors, consultants, notaries, land deed officials, appraisers, and actuaries;

  • musical performers, presenters, singers, comedians, movie stars, soap opera stars, commercials, directors, film crews, photo models, models, playwrights, and dancers;

  • sportsman;

  • advisors, teachers, trainers, lecturers, extension workers, and moderators;

  • authors, researchers, and translators;

  • advertising agency;

  • project supervisor or manager;

  • intermediary;

  • merchandise vendor;

  • insurance agent;

  • distributor of tiered marketing or direct selling companies and other similar activities.


b. Taxpayers who have chosen to be subject to Income Tax based on the rates of Article 17 paragraph (1) letter a, Article 17 paragraph (2a), or Article 31E of the Income Tax Law.


This Taxpayer must notify the Director General of Taxes through the Tax Office, Tax Counseling and Consultation Service Office or Micro Tax Office, or certain channels determined by the Director General of Taxes no later than the end of the Fiscal Year and the Taxpayer is subject to Income Tax based on the General Income Tax provisions starting next Fiscal Year.



Taxpayers who choose to use the tax rates of Article 17 paragraph (1) letter a, Article 17 paragraph (2a), or Article 31E of the Income Tax Law, for the next Fiscal Year - the following Fiscal Year are not subject to SME Final Income Tax.


c. Corporate Taxpayers in the form of limited partnerships or firms formed by several individual Taxpayers who have special expertise in providing similar services with services in connection with independent work.


In the event that one of the owners of the CV or firm has special skills in relation to independent work, while the other owners do not have special skills, then the CV or firm is not subject to SME Final Income Tax as long as they provide services in connection with the special skills and/or independent work of the owner.


d. A taxpayer in the form of Permanent Establishment.


e. Corporate Taxpayers that obtain Income Tax facilities based on:

  1. Article 31A of the Income Tax Law; or

  2. Government Regulation Number 94 of 2010 Regarding Calculation of Taxable Income and Settlement of Income Tax in the Current Year and its amendments or replacements.


Tax Object


The tax object is income from business received or obtained by a resident Taxpayer who has a gross turnover up to IDR 4.8 Billion.


The following incomes are not subject to SME Final Income Tax:

  1. income received or earned by an individual Taxpayer from services in connection with independent work;

  2. income received or earned abroad for which tax is payable or has been paid abroad;

  3. income subject to final Income Tax with the specific provisions of taxation laws; and

  4. non-taxable income.


Tax Base


The monthly gross turnover is the tax base used to calculate the final Income Tax.


Gross turnover which is used as the basis for taxation is the compensation or replacement value in the form of money or the value of money received or obtained from the business, before deducting sales discounts, cash discounts, and/or similar discounts.


Individual Taxpayers who have a certain gross turnover up to IDR 500 million in 1 (one) tax year are not subject to SME Final Income Tax.


In the event that there is a credit note due to the return of goods or the cancellation of all/part of the rights/facilities/facilities by the recipient of the goods and/or services, then the value of the return of the goods or the cancellation of the service can be a deduction of gross income which is the basis for imposition of SME Final Income Tax when the goods or services are returned. The return of goods/services is considered to not occur if there is a replacement of the same goods/services in terms of the physical quantity, type, and price.


Tax Rate


Taxpayers with a certain gross turnover are subject to SME Final Tax at a rate of 0.5% of gross turnover every month.


SME Final Income Tax Imposition Period


SME Final Income Tax Imposition Period are:

  1. 7 (seven) Fiscal Years for individual Taxpayers;

  2. 4 (four) Fiscal Years for corporate Taxpayers in the form of cooperatives, limited partnerships, or firms; and

  3. 3 (three) Fiscal Years for corporate Taxpayers in the form of a limited liability company.


The above period is calculated from:

  1. Fiscal Year of a registered Taxpayer, for Taxpayers who have been registered since the enactment of this Government Regulation, or

  2. Fiscal Year this Government Regulation comes into force, for Taxpayers who have been registered before this Government Regulation comes into force.


In the event that a Taxpayer has a gross turnover of more than IDR 4,800,000,000.00 (four billion eight hundred million rupiah) in the current tax year, income from the business will still be subject to the SME Final Income Tax rate until the end of the relevant Fiscal Year. For the following Fiscal Year, the Taxpayer is subject to Income Tax based on the rates of Article 17 paragraph (1) letter a, Article 17 paragraph (2a), or Article 31E of the Income Tax Law.


Application Procedure For Obtaining Notification Letter


In the event that a Taxpayer who is subject to SME Final Income Tax transacts with a Tax Withholder or Collector, the Taxpayer must provide a Notification Letter to the Tax Withholder or Collector so that it is deducted at a rate of 0.5%.


To obtain a Notification Letter, a Taxpayer submits an application for a Notification Letter to the Director General of Taxes through:

  1. Tax Office where the central Taxpayer is registered;

  2. Tax Extension and Consultation Service Office or Micro Tax Office located within the working area of ​​the Tax Office where the central Taxpayer is registered; or

  3. certain channels determined by the Directorate General of Taxes, through the www.pajak.go.id page among others.


Taxpayers may be issued with a Notification Letter as long as they have complied with the following:

  1. the application is signed by the Taxpayer, or in the event that the application is signed by a non-Taxpayer, it must be accompanied by a Special Power of Attorney as referred to in Article 32 of Law Number 6 of 1983 regarding General Provisions and Tax Procedures as lastly amended by Law Number 7 Year 2021;

  2. has submitted the Annual Income Tax Return for the last Fiscal year if required by tax laws. Except for:

  3. newly registered Taxpayer; or

  4. Taxpayers who do not have the obligation to submit Annual Income Tax Return for the latest Fiscal Year; and

  5. fulfill the criteria for Tax Subjects as referred to in Minister of Finance Regulation Number 99 Article 2 Year 2018.


Within 3 working days since the application is received, the Head of the Tax Office on behalf of the Director General of Taxes must issue:

  1. Notification Letter; or

  2. letter of refusal of the application for Notification Letter,


In the event that the time period has elapsed, the application is deemed accepted and the Head of the Tax Office issues a Notification Letter within 1 working day after the period has elapsed.


In the event that a letter of refusal is issued to a Taxpayer, the Taxpayer may resubmit the application as long as it meets the requirements.


Withholding/Collecting SME Final Income Tax Procedure


Tax Withholder or Collector is a buyer or service user who withholds or collects SME Final Income Tax at a rate of 0.5% for Taxpayers who have a Notification Letter, with the following provisions:

  1. The transaction is subject to withholding or collection of Income Tax in accordance with the provisions governing the withholding or collection of Income Tax; and

  2. The Taxpayer must submit a copy of the Notification Letter to the Tax Withholder or Collector.


Tax Withholder or Collector does not withhold or collect Income Tax Article 22 against Taxpayers who have a Notification Letter that conducts the following transactions:

  1. import; or

  2. purchase of goods,

and the Taxpayer must submit a copy of the Notification Letter to the Tax Withholder or Collector.


In the event that the Taxpayer is unable to submit a copy of the Notification Letter to the Tax Withholder or Collector, and/or the validity of the Notification Letter is not confirmed, the Tax Withholder or Collector shall withhold or collect the Income Tax in accordance with the general provisions of Income Tax.


The withholder or collector will provide evidence of withholding or collection of Income Tax in the form of a Tax Payment Letter which has been filled in on behalf of the Taxpayer withheld or collected and signed by the Tax Withholder or Collector.



SME Final Income Tax Payment Procedure


For taxpayers who pay SME Final Income Tax themselves, SME Final Income Tax is settled by themselves every month and is carried out for each place of business activity.


Self-payment of income tax is carried out using a Tax Payment Slip (SSP) or other administrative means equivalent to an SSP no later than the 15 (fifteenth) of the following month after the Tax Period ends by filling in the Tax Account Code 411128 and the Payment Code 420 for each place of registered business activity.


Meanwhile, taxpayers whose SME Final Income Tax are withheld or collected by Tax Withholders or Collectors, Tax Withholders or Collectors are required to pay SME Final Income Tax no later than the 10 (tenth) of the following month by using the SSP or other administrative means equivalent to the SSP with the following provisions :

  1. filled in the name of the Taxpayer withheld or collected;

  2. signed by the Tax Withholder or Collector; and

  3. Filled with Tax Account Code 411128 and Tax Payment Code 423 as regulated in the Regulation of the Director General which regulates the Form of Tax Payment Form.


If the tax payment due date coincides with a holiday including Saturday, Sunday, national holiday, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.


SME Final Income Tax Filing Procedure


Taxpayers who make their own payment of SME Final Income Tax are deemed to have submitted their Monthly Income Tax Return according to the validation date of the State Revenue Transaction Number listed on the Tax Payment Slip or other administrative means that are equivalent to the Tax Payment Slip. In the event that the Taxpayer does not have revenue in a certain month, the Taxpayer is not required to submit a Periodic Tax Return.


Corporate Taxpayers who have certain gross incomes that are subject to SME Final Income Tax must report income in the form of income from businesses with certain gross turnovers which are subject to SME Final Income Tax and Article 4 paragraph (2) income tax which has been withheld in Attachment IV of the Annual Corporate Income Tax Return no later than 4 months after the end of the tax year. In addition, the Corporate Taxpayer must also attach a list of the gross turnover and SME Final Income Tax payments from each place of business.


Individual taxpayers who have a certain gross income that is subject to SME Final Income Tax must report income in the form of income from businesses with a certain gross turnover that is subject to SME Final Income Tax and Article 4 paragraph (2) Income Tax which has been withheld in the Annual Individual Income Tax Return no later than 3 months after the end of the tax year. In addition, the Individual Taxpayer must also attach a list of gross turnover and SME Final Income Tax payments from each place of business.


For Tax Withholders or Collectors who withhold or collect SME Final Income Tax, are required to submit a Monthly Article 4 paragraph (2) Income Tax Return to the Tax Office no later than the 20 (twentieth) after the end of the Tax Period by filling out a list of withholding evidence on E-SPT so that the SME Final Income Tax that has been deducted/collected will be seen in number 11 of the main form of the Monthly Article 4 paragraph (2) Tax Return.


If the tax payment due date coincides with a holiday including Saturday, Sunday, national holiday, days off for holding the General Election, or national collective leave, the payment can be made on the next working day.


Loss Compensation

Taxpayers who receive or earn income subject to SME Final Income Tax and maintain bookkeeping may compensate for losses on income that are not subject to SME Final Income Tax with the following provisions:

  1. Compensation for losses is carried out starting from the next Fiscal Year in a row up to 5 (five) Fiscal Years;

  2. Taxpayers must keep separate books of account between income that is subject to income tax based on general income tax provisions and income that is subject to final income tax;

  3. The Fiscal Year the SME Final Income Tax is imposed is still calculated as part of that period; and

  4. Losses in a Fiscal Year in which SME Final Income Tax is imposed cannot be compensated for in the following Fiscal Year unless there is a loss from income that is not subject to final Income Tax.


Example of SME Final Income Tax Calculation


First Case

Mr. R owns an electronic shop business and meets the requirements to be subject to SME Final Income Tax. In August 2022, Mr. R has gross revenue of more than IDR 500 Million. In September 2022, Mr. R earned income from the business of selling electronic equipment with a gross turnover of IDR 80,000,000 (eighty million rupiah). Of this amount, sales with a gross turnover of IDR 60,000,000 (sixty million rupiah) were made on September 2022 to the DKI Jakarta Provincial Transportation Service which is a Tax Withholder or Collector, the remaining IDR 20,000,000(twenty million rupiah). rupiah) is obtained from sales to private buyers who come directly to his shop. Mr. R has a Notification Letter of Taxpayer subject to Income Tax which is final based on the provisions of this Government Regulation.

SME Final Income Tax payable for September 2022 is calculated as follows:

a. Final Income Tax withheld by the DKI Jakarta Transportation Agency:

= 0.5% x IDR 60,000,000

= IDR 300,000

b. Final Income Tax paid by the taxpayer:

= 0.5% x IDR 20,000,000

= IDR 100,000

Second Case

PT ABC has a car repair business and was registered as a Taxpayer on 24 January 2019.

Gross turnover obtained by PT ABC:

a. Year 2019 : IDR 100 Million (one hundred million rupiah);

b. Year 2020 : IDR 200 Million (two hundred million rupiah);

c. Year 2021 : IDR 300 Million (three hundred million rupiah);

d. Year 2022 : IDR 400 Million (four hundred million rupiah).

PT ABC is subject to SME Final Income Tax within a period of 3 Fiscal Years, namely from the 2019 Fiscal Year to the 2021 Fiscal Year. For the 2022 Fiscal Year and the following Fiscal Years, it is subject to Income Tax based on the rates of Article 17 paragraph (2a) or Article 17 paragraph (2a) and Article 31E of the Income Tax Law.

 

Legal Basis:

  1. Law Number 7 Year 1983 regarding Income Tax as lastly amended by Law Number 7 Year 2021.

  2. Government Regulation Number 23 Year 2018 Regarding Income Tax on Income from Business Received or Obtained by Taxpayers with Certain Gross Turnover.

  3. Minister of Finance Regulation Number 99/PMK.03/2018 Regarding Government Regulation Number 23 Year 2018 Implementation Regarding Income Tax on Income from Businesses Received or Obtained by Taxpayers with Certain Gross Turnover.

  4. Letter Number SE-46/PJ/2020 Regarding Instructions for Government Regulation Number 23 Year 2018 Implementation Regarding Income Tax on Income from Business Received or Obtained by Taxpayers with Certain Gross Turnover.

 

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