The Harmonization of Tax Regulations for MSMEs Owners Amid the Covid-19 Pandemic

DOI

10.2991/978-2-494069-83-1_88How to use a DOI?

Keywords

Taxes; Income Tax Rates; MSMEs; Covid-19

Abstract

As the Covid-19 pandemic enters its third year in 2022, Micro, Small, Medium Enterprises (MSMEs) are most affected by the pandemic. Therefore, the government issued the Law of the Republic of Indonesia Number 7 of 2021 on the Harmonization of Tax Regulations (HTR), so that individual taxpayers, including MSMEs, who acquire gross turnover up to Rp500,000,000 (five hundred million rupiah) in 1 (one) tax year is not subject to income tax on the share of gross turnover. However, the initial survey shows that there are taxpayers who have not taken advantage of this facility. Therefore, this study analyzes the harmonization of tax regulations for MSMEs owners during the Covid-19 pandemic. This study utilizes two data collection methods, namely Focus Group Discussions (FGD) with tax authorities and surveys to MSMEs owners. The results show that Kupang Primary Tax Office (KPP Pratama Kupang) is ready to implement the HTR law by conducting socialization, especially for MSMEs owners, even though there are some obstacles such as constraints on conducting face-to-face meeting due to strict health protocols during pandemic, network connection, the availability of time and energy, as well as the accessibility to reach remote locations. In addition, the HTR law reduces tax revenues from MSMEs but state revenues from the overall tax sector shows no significant issues. On the other hand, the survey shows that the annual gross turnovers of participating MSMEs reach the value of Rp500,000,000 and more. Moreover, 73.3% of respondents already obtain Micro and Small Business License (MSBL), but only 43.3% of respondents are aware about the enactment of the HPP law. Moreover, 46.7% of respondents are aware that the limit of the non-taxable gross turnover is Rp500,000,000, and 56.7% of respondents know that an income tax of 0.5% will be imposed upon the gross turnover of more than Rp500,000,000. In general, MSMEs owners positively welcome the HTR law as it reduces the tax burden.

Copyright

© 2022 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sri Endar Utami
AU  - N. Yudha Eka
AU  - S. Kesos
AU  - W. Agusta Amanda
PY  - 2022
DA  - 2022/12/30
TI  - The Harmonization of Tax Regulations for MSMEs Owners Amid the Covid-19 Pandemic
BT  - Proceedings of the International Conference on Applied Science and Technology on Social Science 2022 (iCAST-SS 2022)
PB  - Atlantis Press
SP  - 494
EP  - 497
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-494069-83-1_88
DO  - 10.2991/978-2-494069-83-1_88
ID  - Utami2022
ER  -