The Ministry of Economy and Finance (MEF) announced the guideline, dated on 19 June 2024 on the implementation of the sub-decree on tax incentives introduced to encourage Informal Economy.

This Prakas aims to define the rules and procedures for implementing tax incentives aimed to develop the informal economies for enterprises in priority sectors.

The tax incentive applies to MSMEs in informal economies that voluntarily register to operate in one of the following priority sectors, such as 1) wholesale, retail, and repair, 2) accommodation and food and beverage services, 3) crafts, and 4) agricultural community.

Micro-enterprises registering between 2023 – 2028 will be exempt from both registration and update fees. Small enterprises registering between 2023 – 2028 will receive exemptions from prior penalties, outstanding tax liabilities, and both registration and update fees. Medium-sized enterprises registering between 2024 – 2025 will also be exempt from prior penalties and tax liabilities.

This initiative seeks to develop and strengthen skills throughout the economy and expand outreach regarding the formalization process and to encourage informal enterprises to join the formal economy, allowing greater support for the growth of such businesses, as well as standardizing the national economy.