The Legal Standing of Sole Proprietership As A Taxable Subject

DOI

10.2991/978-2-38476-180-7_115How to use a DOI?

Keywords

Sole Proprietorship; Job Creation Law; Taxation

Abstract

One of the government's initiatives to support the growth of micro, small, and medium-sized enterprises (MSMEs) and boost the economy of the country is the implementation of the Job Creation Law. A new law brought about by the Job Creation Law is the creation of a Sole Proprietorship, a unique limited liability business specifically designed for MSMEs. According to Article 153A paragraph (1) of the Job Creation Law, a Sole Proprietorship is a company that meets the criteria of MSMEs and can be established by a single individual. With this provision, a Sole Proprietorship is legally recognized as a new form of legal entity. However, when it comes to tax aspects, the provisions regarding Sole Proprietorships are not explicitly and specifically regulated, leading to different interpretations among taxpayers. There is a legal vacuum regarding the position of Sole Proprietorships in the Tax Law when it is related to the category of tax subjects.The problem analyzed in this research pertains to the legal standing of a Sole Proprietorship as a tax subject with the enactment of the Job Creation Law, and the legal implications of the lack of regulations regarding Sole Proprietorships in the Tax Law. The research findings indicate that the legal standing of a Sole Proprietorship as a tax subject, with the enactment of the Job Creation Law, is recognized as a taxable entity. The legal implications of the absence of regulations for Sole Proprietorships in the Tax Law, in light of the Job Creation Law, have both positive and negative impacts. The positive impacts include simplicity, limited supervision, ease of handling potential fraud and tax evasion. On the other hand, the negative impacts include legal uncertainty, tax treatment disparities, administrative difficulties, and weaknesses in tax control and enforcement. To address these issues and enhance the effectiveness of the overall tax system, it is necessary to establish specific laws regulating Sole Proprietorships, conduct education and continuous adjustment, and provide ongoing guidance and education.

Copyright

© 2023 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  - Ni Kadek Suarsiningsih
AU  - I. Made Arjaya
PY  - 2023
DA  - 2023/12/31
TI  - The Legal Standing of Sole Proprietership As A Taxable Subject
BT  - Proceedings of the International Conference on “Changing of Law: Business Law, Local Wisdom and Tourism Industry” (ICCLB 2023)
PB  - Atlantis Press
SP  - 1133
EP  - 1150
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-180-7_115
DO  - 10.2991/978-2-38476-180-7_115
ID  - Suarsiningsih2023
ER  -