The issue of tax amnesty is heating up. The tax amnesty discourse is deliberately formalized to meet tax revenue targets. Unfortunately, what we have heard so far is that tax amnesty is only "gifted" to big business players. So, what about the fate of micro, small, and medium enterprises (MSMEs)?
Now, good news is being echoed by various groups for this sector. They argue that tax amnesty should also provide a sense of fairness and not discriminate between large and small entrepreneurs.
The Chairman of the Indonesian Employers Association (Apindo), Hariyadi Sukamdani, stated that MSME participation in tax amnesty has the potential to be beneficial. It will directly influence better and more orderly business bookkeeping for business actors.
"Bookkeeping will improve, making businesses more bankable," said Hariyadi in Jakarta in mid-June. Good financial records of a business unit, he continued, will enhance business credibility and create an attractive assessment from banks. This will facilitate easier access to loans if needed.
As a key component of Indonesia’s economy, MSMEs play a massive role in various aspects. For example, in terms of employment, MSMEs contribute 104.6 million jobs (according to the Ministry of Cooperatives and Small and Medium Enterprises).
Meanwhile, in terms of Gross Domestic Product (GDP), MSMEs contributed IDR 5.4 trillion out of the total GDP recorded at IDR 9 trillion in 2013. However, their significant contribution has not been proportional to tax compliance. In 2013, the Directorate General of Taxes at the Ministry of Finance stated that only 10% of six million business entities paid taxes.
Various efforts have been made by the government to increase tax compliance among MSMEs. One of them was the issuance of Government Regulation No. 46 of 2013 concerning Income Tax on Income from Businesses with a Certain Gross Turnover. Under this regulation, business operators are required to pay a final income tax of one percent of their turnover.
However, PP 46/2013 turned out to be ineffective because many taxpayers were still dishonest. Starting this year, fiscal authorities will intensify breakthroughs in line with law enforcement.
On the other hand, MSME participation in tax amnesty will create a more stable business climate, free from disputes with tax officers. Additionally, business asset records will become more transparent. Therefore, Hariyadi hopes that the tax amnesty regulation will be finalized before June 28, 2016, coinciding with the approval of the Revised State Budget 2016.
"Once it is approved, there will be ample time for socialization," he said. Hariyadi then explained why MSMEs have struggled with tax compliance. Mainly, it is due to a lack of knowledge about proper financial reporting.
"MSMEs often lack stability in business consistency, and their financial planning is also weak," he said. This explains why MSMEs are perceived as undisciplined taxpayers, highlighting the need for improvements.
A similar opinion was expressed by the Chairman of the MSME Association, Ikhsan Ingratubun. He stated that his organization welcomes the government's intention to facilitate tax payments for MSMEs. Many MSMEs have not been paying taxes according to regulations. By participating in tax amnesty, MSMEs will no longer be seen solely as entities that need support to grow but as contributors to government revenue.
Principle of Fairness
Member of Commission XI, Heri Gunawan, stated that the Tax Amnesty Bill should not only target large-scale tax evaders. MSMEs must also be given a mechanism to benefit from tax amnesty.
Heri revealed that this issue arose when Commission XI considered the principle of fairness. Tax amnesty should not be limited to large tax evaders. "We shouldn't just debate whether tax amnesty is fair or not. In the end, we will include a provision for MSMEs as well. Eventually, it will be approved as an additional item," Heri said at the Parliament building in Senayan, Jakarta, recently.
The Gerindra politician explained that criteria for tax-evading MSMEs have been determined, one of which is annual capital turnover. Based on discussions agreed upon by all factions in the Indonesian Parliament, an MSME tax evader is defined as an individual or company with an annual capital turnover below IDR 4.8 billion.
"This means their annual asset turnover is only IDR 4.8 billion. If we only focus on big evaders, what about the smaller ones? They should be included too," he said.
When asked about the number of tax-evading MSMEs, Heri stated that the figure is quite significant, totaling 6,519 taxpayers. "We must also provide opportunities for MSMEs that have not settled their previous tax obligations. It’s not just about the big ones; we must be fair," he said.
Finance Minister Bambang Brodjonegoro explained that the Tax Amnesty Bill Task Force has thoroughly discussed the bill article by article. According to him, economic developments in 2016 have not positively impacted domestic economic growth, as the global economy has yet to provide any significant benefit to Indonesia.
Considering various economic variables, Bambang stated that the government aims to stimulate Indonesia’s economic growth domestically through consumption and investment. "Through tax amnesty, there will be repatriation that can bring capital inflows into the country, maintaining liquidity and boosting demand for investments from both the government and private sector," he said.
Unfortunately, during that occasion, the Finance Minister did not mention tax amnesty for MSMEs. We hope that the government, based on input from various stakeholders, will be able to accommodate the interests of Indonesia’s MSMEs. Hopefully! (Various sources)