Types of Taxes that MSME Owners Must Understand

Have you heard of the role of the business owner to the state? You can make these contributions through regular tax payments. Of course, the business in question does not only include enterprise-scale businesses, but also other businesses such as MSMEs.

Well, the MSME sector itself is known as one of the pillars that supports Indonesia’s economic growth. You see, as reported by money.kompas.com, 61% of GDP in Indonesia comes from buying and selling activities in the MSME sector. Of course, taxes do not only provide benefits to society. You see, when MSME owners make tax payments, the credibility of their business will increase. So, what are the taxes related to SMEs? Find out the explanation based on the types of MSMEs and the following tax regulations! 

[Also read: Do these 6 things so that you become a free business owner]

Basic tax regulations and types of MSMEs

Regulations regarding taxes have been established on a legal basis, namely Law no. 16 of 2009 concerning the General Provisions of Taxation which was stipulated to improve the previous legal basis, namely Law no. 6 of 1983 concerning the imposition of taxes for MSMEs. Meanwhile, MSMEs in Indonesia are also categorized into 3 types based on the law.

1. Micro Enterprise

Micro-enterprises refer to productive economic enterprises that can be owned by individuals or business entities. A business is categorized as a micro-enterprise if the generated turnover reaches Rp. 50,000,000, but does not include building and land costs. In addition, micro businesses also need to generate sales of at least IDR 300,000,000 per year.

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2. Small Business

In addition to micro businesses, there are also small businesses, namely independent businesses owned by individuals or groups. In addition, small businesses are also not included as branches of a main business. If your business is categorized as a small business, then the net worth of your business must be at least IDR 50,000,000 and the maximum need is IDR 500,000,000.

3. Medium Enterprise

The last category of MSMEs is a medium-sized business, which is a business that is not a branch of the central company, either directly or indirectly. Medium-sized businesses have assets of at least IDR 500,000,000 to IDR 10,000,000,000. This wealth figure does not include land or buildings.

Types of taxes that MSME owners need to understand

After understanding the types of MSMEs that have been regulated by law, then you also need to understand what types of taxes are related to MSME actors. Basically, there are 2 types of taxes that MSME actors need to pay based on time periods, namely monthly and yearly.

a. Monthly Tax

Because it needs to be paid or reported monthly, monthly taxes are also known as mass taxes. There are 6 types of monthly taxes, namely:

1. Income Tax (PPh) Article 21

PPh 21 will be charged to MSME owners if you have employees whose number includes the business category that is subject to income tax. Payment of this tax is made through deductions from salaries, wages, honorarium, allowances, and payments related to work activities, services, as well as Domestic Taxpayers.

2. Income Tax Article 23

This income tax is intended for medium business owners. This tax is required for companies that transact through dividend payments or profit sharing to shareholders in the form of companies. The maximum share ownership is 25%.

3. Income Tax Article 26

Article 26 Income Tax is imposed if the owner of the MSME transacts with an Overseas Taxpayer. There are various types of transactions that fall into this category, such as salaries, services, interest, dividends, royalties, rents, and so on, which are included in PPh Article 21 and PPh Article 23. Withholding PPh 26 can be done in personal or personal contexts. foreign body.

4. Income Tax Article 4 paragraph (2)

Income Tax Article 4 paragraph (2) is a tax imposed on land and/or building rental transactions, transfer of custody of land and/or buildings, construction service business income, as well as corporate dividends for individuals.

5. MSME Final PPh PP 23/2018 (MSME Final Tax)

Based on Government Regulation Number 23 of 2018 concerning business income received by taxpayers who have a certain gross turnover, MSME owners are subject to final income tax. PPh MSME Final PPh 23/2018 has a different time period, for example based on the form of organization. In addition, this Income Tax provides benefits for MSME owners because the tax rate is lower than the normal corporate income tax rate.

6. VAT

MSME owners are subject to Value Added Tax (VAT) if their business has been confirmed as a Taxable Company (PKP). Keep in mind that business owners whose gross turnover is below 4.8 billion rupiah also choose to become PKP. Then, the owner of the MSME can issue a Tax Invoice as well as credit the Income Tax.

b. Annual Tax

Regardless of the type of business you run, both individuals and business entities, every MSME is required to report its annual tax return. The income tax paid is calculated based on the amount of income tax payable, namely through the Basic Tax Imposition (DPP) and income tax. This calculation is carried out through the calculation of Taxable Income multiplied by the progressive tax rate of PPh Article 17 paragraph 1.

Through the taxes you pay, the state can improve the welfare of its people, for example through the provision of public facilities. Meanwhile, taxes are also mandatory and will be imposed on every individual or entity or company located in a country.