Minister Ensures VAT Increase Policy Wil Not Affec MSMEs
- VIVA.co.id/Anisa Aulia
Jakarta, VIVA – The Minister of Cooperatives and Small and Medium Enterprises, Maman Abdurrahman, believes that the government’s policy on adjusting the Value Added Tax (VAT) to 12 percent will not impact the performance of MSMEs.
According to Minister Abdurachman, this step is part of a long process that began during the Covid-19 era when the government faced the dual challenge of securing the real economy while maintaining the country’s financial stability.
“At that time, we were faced with two critical situations: how to safeguard employees in the formal sector at risk of layoffs, and how to protect the grassroots economy,” the minister said on Saturday (Dec 21).
To balance the situation, the government decided to temporarily lower corporate taxes to ease the burden on companies, especially those in sectors affected by Covid-19, while increasing VAT as compensation.
The minister emphasized that although VAT has been raised, the policy will not affect MSMEs or lower-middle-income communities.
“We ensure that only luxury and premium goods are impacted by this increase,” Minister Abdurrahman remarked.
“The 12 percent VAT increase only applies to premium food items like wagyu beef, which are clearly not part of our daily consumption. This will not affect the consumption of lower-middle-income groups or small and medium enterprises that deal with staple goods,” he added.
As part of its support for the MSME sector, the government has launched several tax incentives specifically designed to assist small business owners.
One is the extension of the 0.5 percent final income tax incentive for seven years, provided to MSME entrepreneurs with an annual turnover of up to IDR 4.8 billion.
This incentive is aimed at helping micro and small enterprises withstand the unavoidable economic impact of fiscal policy changes.
Responding to public opposition regarding the 12 percent VAT increase, minister Abdurrahman clarified that the government has prepared an incentive package worth IDR 265 trillion to mitigate its effects.
