MSME Turnover Statement Letter: Key to Tax Withholding Exemption for Individual Taxpayers

The Indonesian government continues to commit to providing ease and fairness for Micro, Small, and Medium Enterprises (MSMEs). One of the most important policy milestones in the Harmonization of Tax Regulations Law (UU HPP) and its derivative regulations is the Non-Taxable Gross Turnover facility of IDR 500,000,000 (five hundred million rupiah) per year for Individual Taxpayers (WP OP) classified as MSMEs.

However, in practice, confusion often arises when Individual MSMEs transact with tax withholding parties. How can MSMEs whose turnover has not reached IDR 500 million avoid being withheld? The answer lies in an administrative document called the Turnover Statement Letter (Surat Pernyataan Omzet).

This article will thoroughly explore the regulations regarding this Statement Letter, its legal basis, usage mechanism, risks of misuse, and real case illustrations according to Minister of Finance Regulation (PMK) Number 164 of 2023.

1. Turnover Statement Letter: Definition and Function

Based on PP Number 55 of 2022 and PMK Number 164 of 2023, Individual Taxpayers who have a certain gross turnover (MSMEs) are not subject to Income Tax (PPh) on the portion of gross turnover up to IDR 500,000,000.00 in one Tax Year.

This means that if a meatball seller or freelance graphic designer has a cumulative turnover from January that is still under IDR 500 million, they are not yet required to pay the 0.5% Final Income Tax.

Function of the Statement Letter

To prevent tax withholding on turnover that should be tax-free, the Individual Taxpayer must submit a Statement Letter to the counterparty. This letter serves as an official declaration that:

1. The Taxpayer is a subject of MSME Final Income Tax (PP 55/2022).
2. The Taxpayer's cumulative turnover in the current year has not exceeded IDR 500 million.

With this letter, the tax withholder will not withhold Income Tax (0% effective rate) but will still issue a Nil Withholding Receipt (Bukti Potong Nihil) as an administrative document.

Format and Content

This statement letter is self-created (PMK 164/2023 Attachment C) and must contain:

• Taxpayer Name, NPWP or NIK, and Address.
• An explicit statement that gross turnover has not exceeded IDR 500 million.
• Responsibility clause regarding the truth of the declaration.
• Signature of the Taxpayer or their proxy.

Note: This facility only applies to Individuals. Corporate entities (CV, PT, Cooperatives) are still withheld 0.5% from the first rupiah by showing a Certificate (Suket).

2. Case Illustrations of Statement Letter Application

Case A: Transaction Below IDR 500 Million (Valid Use)

Scenario: Mr. R (Electronics) has IDR 200m cumulative turnover. In April, he receives an order for IDR 100m from Dinas Kominfo.

Case B: Transaction Crossing the IDR 500 Million Limit

Scenario: Mr. R's turnover is IDR 480m. He transacts again for IDR 50m (Total cumulative IDR 530m).

Mechanism: Mr. R may no longer provide a Statement Letter. He must submit a Certificate (Suket) PP 55/2022. The withholder will withhold 0.5% (IDR 250,000) from the full transaction. Mr. R can adjust the overpayment in his Annual Tax Return.

Case C: Misuse of Statement Letter (Legal Sanctions)

Scenario: Mr. Mamat audit reveals IDR 600m actual turnover, but he used a Statement Letter all year to avoid tax.

3. Reporting Obligations

1. Periodic Tax Return: Not required if turnover is under IDR 500m (Nil).
2. Annual Tax Return: Taxpayers must report monthly turnover recapitulation in Form 1770 to prove the validity of the 0% facility.

In conclusion, the Turnover Statement Letter is an instrument of trust. This trust must be maintained with compliance and honesty in reporting actual turnover.

References:

• Law Number 7 of 2021 (UU HPP).
• Government Regulation (PP) Number 55 of 2022.
• Minister of Finance Regulation (PMK) Number 164 of 2023.
• Director General of Taxes Regulation Number PER-11/PJ/2025.