New Income Tax for SME will Reduce Job Creation

Ady TD Achmad, Robert Sidauruk

The Government’s decision to impose a new income tax tariff on small-medium enterprises (SMEs) could reduce the creation of new job opportunities. This view was put forwarded by Timboel Siregar, Secretary General of All-Indonesia Workers Organization (OPSI) during an interview with Hukumonline on Tuesday.

According to Siregar, the new income tax tariff—regulated under the Government Regulation No. 46 of 2013.—will be a great burden on SMEs.

To adjust to this new development, Timbul said that SMEs will opt to increase +the price of their goods/services and postpone recruiting new employees. This will create the effect of a significantincrease in the unemployment rate.

According to data provided by the Ministry of Cooperatives and SMEs, there are 55.2 million SMEs throughout Indonesia, which contribute to the creation of 101.72 million jobs. .

“The Government should protect SMEs that create more job opportunities by issuing policies on competitive interest rates, easier access to markets, and non-taxable business profits,” Timbul added.

Likewise, Nina Tursinah, deputy chairman of SMEs at the Indonesian Employers Association (Apindo) said that the SMEs need assistance from the Government to improve their competitiveness and increase their revenues.

While supporting the new income tax scheme, Nina also argued that it must be followed by otherassistance to SMEs from the Government..

“If anSME can improve its quality and competitiveness in the market, the new income tax tariff of 1% should not be a burden,” Nina asserted.

(hot/kc)