Monday, July 14, 2008
Income Tax on Micro, Small and Medium Businesses Slashed by 50 Percent
Source: The Jakarta Post

The House of Representatives and the government have agreed to reduce income tax tariff by 50 percent of normal tariffs for micro, small and medium businesses which have legal entities.

The reduced income tax tariff was given to taxpayers with a business turnover of Rp 4.8 billion (US$526,451) to Rp 50 billion per annum, said Drajat Wibowo, a member of the House's working committee on income tax bill, at the weekend.

For example, he said, if a resident taxpayer had a business turnover of Rp 5 billion and posted a net profit of Rp 500 million, a total of Rp 480 million would be subject to a 14 percent income tax tariff.

Meanwhile, the remaining Rp 20 million would be subject to a 28 percent normal tariff, he said.

If the entrepreneur has no legal entities, they will be treated as an individual taxpayers and subject to progressive tariff accordingly, he said.

Under the new agreement, the bigger the business turnover of a micro, small and medium business entrepreneur the smaller the proportion of incentives or facilities to income tax without incentives would be, he said.

He said the House and the government had also agreed to reduce income tax tariff by 5 percent of normal tariffs for publiclylisted companies which sell at least 48 percent of their shares in the Indonesia stock exchange.