Revised 0.5% Final Income Tax Regulation for MSMEs Excludes CVs and PTs

Jakarta, CNBC Indonesia – The government has officially issued Government Regulation No. 20 of 2026 amending Government Regulation No. 55 of 2022 on Adjustments to Income Tax Regulations.

The issued regulation aims to provide targeted ease and simplicity for taxpayers with specific gross turnover, as well as legal certainty in the implementation of income tax on business income received or obtained by taxpayers with certain gross turnover.

Article 20A

A key provision is the insertion of Article 20A between Articles 20 and 21, which states: “Expenses consisting of bribes, gratuities, or any other form of payment, as defined in regulations concerning corruption and bribery offences, including those given to foreign public officials, are not considered costs for obtaining, collecting, or maintaining income that can reduce gross income.”

Thus, the government is strengthening tax integrity by confirming that bribes and gratuities cannot be claimed as tax-deductible expenses.

Article 56

Article 56 outlines business income subject to 0.5% final income tax. Paragraph (4) lists freelance services whose income is not subject to final income tax, as follows:

• expert professionals providing freelance services, including lawyers, accountants, architects, doctors, consultants, notaries, land deed officials, appraisers, actuaries, and similar experts;

• musicians, presenters, singers, comedians, film stars, soap opera actors, advertising models, directors, film crew, photo models, models, drama actors, dancers, sculptors, painters, content creators on digital platforms (influencers, social media personalities, bloggers, vloggers, and similar), and other artists;

• athletes;

• advisors, educators, trainers, lecturers, counselors, moderators, and similar professions;

• authors, researchers, translators, and similar professions;

• advertising agents;

• project supervisors or managers;

• intermediaries or customer finders;

• sales representatives;

• insurance agents;

• distributors of multi-level marketing or direct sales companies, and similar activities.

Article 57

The most significant change is in Article 57, which specifies taxpayers subject to final income tax, as outlined in paragraph (1):

1. Individual taxpayers; and

2. Corporate entities structured as single-person PTs and cooperatives receiving or obtaining income with a gross turnover not exceeding Rp4.8 billion in a single tax year.

Those not included in the aforementioned taxpayers are specified in paragraph (2) as follows:

1. Taxpayers who elect to be taxed under:

• the rate under Article 17(1)(a) of the Income Tax Law for individual taxpayers; or

• the rate under Article 17(1)(b) of the Income Tax Law, considering Article 31E, for corporate taxpayers;

2. Corporate entities structured as single-person PTs under paragraph (1)(b), established by individual taxpayers with specific expertise providing services similar to freelance services under Article 56(4);

3. Corporate entities under paragraph (1)(b) receiving income tax facilities under:

• Article 31A of the Income Tax Law;

• Government Regulation No. 94 of 2010 on Calculation of Taxable Income and Income Tax Payment in the Current Year, or any amendments or replacements; or

• Articles 75 and 78 of Government Regulation No. 40 of 2021 on Special Economic Zone Management, or any amendments or replacements;

4. Permanent establishment taxpayers;

5. Individual taxpayers and all single-person PTs established by them, whose total gross turnover from income under paragraph (1) exceeds Rp4.8 billion in a single tax year; and

6. Cooperative taxpayers under paragraph (1)(b) that have exceeded four tax years since their registration year.

Article 58

Under previous regulations, the Rp4.8 billion turnover threshold was assessed per taxpayer or individual business entity. However, Government Regulation No. 20 of 2026 adopts an approach focusing on economic substance rather than legal form.

Gross turnover is determined in paragraph (1) as follows:

1. the total gross turnover from business and freelance service income in the previous tax year, whether subject to non-final or final income tax, including gross turnover received or obtained overseas; and

2. remuneration or monetary value received from business and freelance services before deducting sales discounts, cash discounts, or similar reductions.

Additionally, married individual taxpayers are specified in paragraph (2) as follows: