Jakarta. Presidential candidate Prabowo Subianto has announced plans to implement a three-year tax exemption for micro, small, and medium enterprises (MSMEs) if he secures victory in the 2024 Presidential Election.

"In support of MSMEs, we will provide a three-year tax incentive," Puteri Komarudin, spokesperson for Prabowo's campaign team, said during a press conference on Thursday.

The program aims to assist early-stage MSMEs in financial management and stability before being subject to taxation.

"This allows newly established MSMEs to organize their cash flow, and learn financial management first, so they can become successful entrepreneurs, and only then will they be subjected to taxes. It's one of the programs we can proudly present to MSMEs throughout Indonesia," explained Puteri.

MSMEs play a vital role in Indonesia's economy, contributing 61.07% to the GDP and employing approximately 117 million workers, or 97 percent of the workforce. However, they are estimated to contribute less than 1 percent to state tax revenues as only a few are registered taxpayers and have been enjoying tax incentives.

Prabowo's advisor, Edy Slamet Irianto, outlined that the tax for MSMEs could be completely exempted or have reduced rates based on necessity. He emphasized a selective approach in providing incentives, with conditions that include contributing to national economic growth and tangible impact on improving purchasing power and community welfare.

"So, there needs to be a selection and an evaluation of the impact (of MSMEs receiving tax incentives), to what extent (their contribution) is to the national (economy) and the community itself," concluded Edy.

Currently, MSMEs with annual turnover less than Rp 4.8 billion ($309.000) enjoy a 0.5 percent income tax incentive borne by the government. Additionally, they are not required to make tax payments for their business up to a certain limit, ranging from three to seven years.

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