MSME Minister Asserts MSME Tax Will Not Increase, 0.5 Per Cent Rate to Become Permanent
The Minister of Micro, Small, and Medium Enterprises (MSMEs), Maman Abdurrahman, has emphasised that the government will not increase the tax rate for MSME players. This statement was made in response to public concerns regarding regulatory changes within Government Regulation (PP) Number 20 of 2026.
Maman ensured that the tax incentive structure for small businesses will be maintained to preserve purchasing power and business sustainability at the grassroots level. “There is no change, nor an increase, in MSME taxes. Therefore, tax incentives for MSMEs remain the same as before,” Maman stated during a press conference in Jakarta on Wednesday (3/6/2026).
In his explanation, Maman detailed the tax scheme that remains in effect for business owners. Significant changes in PP Number 20 of 2026 actually bring good news for entrepreneurs. Previously, the 0.5 per cent final tax rate had a validity period that required annual renewal; however, this policy has now been established as permanent.
“Previously, it was extended annually; now, it is not limited. This is to provide certainty for MSME players so they can focus on developing their businesses without worrying about annual regulatory changes,” he added.
Despite providing this flexibility, the government is implementing adjustments to prevent fraudulent practices. Based on evaluations, it was discovered that certain parties were intentionally splitting business entities into several small entities solely to enjoy the 0.5 per cent final income tax rate.
To anticipate this, the government has established stricter rules of engagement. “This incentive is intended for those who are truly MSMEs. If the turnover exceeds Rp4.8 billion, it must be fair and follow the appropriate taxation treatment,” Margo emphasised.
The permanent policy for the 0.5% final income tax rate is expected to provide a breath of fresh air for the national MSME investment climate and offer a more stable legal foundation for business owners in formulating long-term business plans.