MSME Minister reveals reasons why CV and PT are excluded from 0.5 per cent tax scheme

The Minister of Micro, Small, and Medium Enterprises (MSMEs), Maman Abdurrahman, has revealed the government’s reasoning for excluding business entities such as non-individual CVs and PTs from the 0.5 per cent final income tax (PPh) scheme, as part of the amendments to Government Regulation (PP) Number 20 of 2026.

According to Maman, this policy was implemented after the government discovered practices involving the misuse of tax incentives by ineligible parties. “Many are splitting PTs and CVs, creating 10 or 15 different companies, all arranged so that their turnover remains below Rp4.8 billion per year to continue receiving the 0.5 per cent tax incentive facility,” he stated during a press conference in Jakarta on Wednesday.

He noted that such practices are unfair, as businesses that should no longer fall under the MSME category are still enjoying tax facilities intended for small enterprises. “It is not fair; large-scale businesses with turnovers exceeding Rp4.8 billion should not be enjoying MSME facilities,” he said.

Nevertheless, Maman emphasised that there will be no tax increase for genuine MSME players. The 0.5 per cent final PPh incentive remains available for sole proprietorship PTs and CVs with an annual turnover below Rp4.8 billion.

For non-individual business entities, taxation will now be based on net profit at the normal rate of 22 per cent. However, Maman noted that the government is still providing an incentive in the form of a 50 per cent tax rate reduction for business entities with a turnover below Rp4.8 billion.

“For non-individual PTs and CVs with turnover below Rp4.8 billion, an additional 50 per cent discount incentive is provided, reducing the rate to 11 per cent,” he added.

He also confirmed that the provisions for the 0.5 per cent final PPh rate and the 50 per cent tax reduction incentive, as regulated in the amendments to Government Regulation (PP) Number 20 of 2026, are permanent to provide certainty and ensure business sustainability. The MSME Minister stressed that this policy aims to create fairness and ensure that tax incentives are accurately targeted at businesses that truly belong to the MSME category.