The Impact of Tax Incentives on MSMEs Survivability During Covid-19 Pandemic: Case Study in Semarang City

Abstract

The impact of the COVID-19 pandemic is quite significant, including on the economy. To reduce the adverse effects on the economy, the government issued tax incentives. This tax incentive is a stimulus to help the community, especially taxpayers, survive and boost economic growth, which slumped due to the pandemic. This study aims to determine the effect of pandemic tax incentives on the survival ability of MSMEs during a pandemic. This study uses primary data obtained through a questionnaire survey of MSMEs in Semarang City, Central Java, Indonesia. The data was then processed using multiple regression with the help of SPSS software. The study results indicate that tax incentives knowledge does not affect the survivability of MSMEs. The result also shows that the tax incentives utilization affects MSMEs survivability. Tax incentives knowledge does not affect the MSMEs survivability because, during the pandemic, MSMEs experienced a decline in turnover and profits. The taxes also paid fell or even zero. MSME actors need other direct assistance, such as Direct Cash Assistance / Assistance for Micro Business Actors, free electricity assistance, and credit restructuring.