PP 20/2026 Demonstrates Government's Support for Micro and Small Enterprises

Deputy for Small Enterprises at the Ministry of Micro, Small, and Medium Enterprises (UMKM), Temmy Satya Permana, has affirmed that Government Regulation (PP) Number 20 of 2026 on Adjustments to Income Tax Provisions is evidence of the government’s support for micro and small enterprises (UMK).

“The most important thing in PP 20 is the government’s support for micro and small enterprise taxation, specifically for those with turnover below Rp4.8 billion. For individual taxpayers and sole proprietorships, there is no time limit. They can continue using the 0.5% final income tax rate on gross turnover without any time restriction,” Temmy said at the Ministry of UMKM office in Jakarta on Wednesday (24/6).

This provision differs from the previous regulation under PP 55, where the 0.5% final income tax facility was only available for a limited period. Individual taxpayers could utilise it for seven years, while corporate entities such as limited liability companies (PT) and limited partnerships (CV) were limited to approximately four years.

With the enactment of PP 20, individual taxpayers and sole proprietorships with turnover below Rp4.8 billion can continue using the 0.5% final tax rate indefinitely. “The policy affirmation in PP 20 makes it increasingly clear that micro and small enterprises must be protected, especially through tax support. This applies specifically to UMK, as those with turnover below Rp4.8 billion are still categorised as micro and small enterprises,” he explained.

Furthermore, the government continues to maintain tax exemption facilities for businesses with very small turnover. Temmy stressed that individual taxpayers and sole proprietorships with annual turnover up to Rp500 million are not subject to income tax. “For individual taxpayers and sole proprietorships with turnover below Rp500 million, the tax rate remains 0%,” he emphasised.