Jakarta (ANTARA) – The Ministry of Finance stated that the issuance of the Law on the Harmonization of Tax Regulations (UU HPP) is a strong foothold to encourage the implementation of fiscal reforms towards Indonesia becoming a developed country in 2045.
This happens because it is able to realize a tax system that is more just and with legal certainty so as to expand the tax base and increase taxpayer compliance.
“This effort is carried out while maintaining alignment with the interests of the wider community and the dynamics of the economy in the future,” said Head of the Fiscal Policy Agency of the Ministry of Finance Febrio Kacaribu in Jakarta, Thursday.
In the field of Income Tax, these efforts are carried out through policy improvements such as incentives for MSME Taxpayers (WP), improving the progressivity of Personal Income Tax (OP) rates, and improving administration.
The administrative improvement in question is the use of a Population Identification Number (NIK) as a Taxpayer Identification Number (NPWP) for WP OP.
The HPP Law also increases the support for MSME taxpayers through the provision of incentives in the form of a non-taxable income limit (PTKP) for the gross circulation of MSME taxpayers up to Rp500 million a year.
“This means that WP OP MSMEs that have a gross turnover of up to Rp. 500 million a year do not pay PPh,” said Director General of Taxes at the Ministry of Finance, Suryo Utomo.
WP SMEs still get a 50 percent discounted PPh rate facility in accordance with Article 31E of the Income Tax Law so that it is expected to increase the resilience and competitiveness of MSMEs in Indonesia.
The HPP Law also improves the progressiveness of PPh OP rates by widening the range of Taxable Income (PKP) layers to the lowest PPh OP rate of 5 percent and adding the highest layer of PPh OP rates to 35 percent.
The government has agreed to the proposal of the DPR RI to widen the range of PKP OP layers that are subject to the lowest income tax rate of 5 percent from Rp. 50 million to Rp. 60 million.
The PTKP limit for OP taxpayers is currently set at IDR 4.5 million per month or IDR 54 million per year for single OP, an additional IDR 4.5 million a year for married taxpayers, and an additional IDR 4.5 million a year for each dependent of a maximum of three people.
Thus, people with incomes of up to IDR 4.5 million per month are still not burdened with income tax, so that those with middle incomes have a lighter tax burden.
On the other hand, the HPP Law also stipulates the PPh OP rate of 35 percent for PKP layers above IDR 5 billion which is in line with the principle of ability to pay or abilities to pay or mutual cooperation.
The principle of gotong royong means that people with low incomes are protected while those with high incomes pay higher taxes.
In addition, the HPP Law provides a reorganization of tax treatment for grants in kind or fringe benefits to make the PPh system fairer.
For certain employees or groups, the HPP Law stipulates that in-kind gifts become a tax object for the recipient and this kind of gift can be a cost in calculating taxes for the company that provides it.
To continue to provide justice for the community, some types of in-kind are not taxed as regulated in the HPP Law.
The types of in-kind are the provision of food and drink for all employees, the provision of in-kind in certain areas, and the provision of in-kind due to the necessity in carrying out the work.
Then in kind which comes from APBN or APBD funds and in kind with certain types and limitations.
In addition to the reform of personal income tax, the HPP Law also reorganizes the corporate income tax rate which was originally planned to be reduced to 20 percent starting 2022 to remain at 22 percent.
The corporate income tax rate of 22 percent is still competitive and conducive to maintaining the investment climate in Indonesia, especially when compared to other countries’ income tax rates.
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Reporter: Astrid Faidlatul Habibah
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