Revised 0.5% Final Income Tax Rules for SMEs: Eligible Taxpayers

JAKARTA – The government has officially narrowed the group of taxpayers eligible for the 0.5% final income tax (PPh) scheme for small and medium enterprises (SMEs) through Government Regulation (PP) No. 20 of 2026. The regulation, which amends PP No. 55 of 2022 on Income Tax adjustments, specifies that the SME final income tax facility now applies only to individual taxpayers, single-person corporations, and cooperatives. The facility remains available to taxpayers with gross turnover or revenue not exceeding Rp 4.8 billion in a tax year. “Domestic taxpayers with a specific gross turnover subject to final income tax are individual taxpayers, single-person corporations, and cooperatives,” states Article 57(1) of PP No. 20 of 2026. Despite narrowing the eligible group, the government has not altered the 0.5% final income tax rate for SMEs. Article 56(2) of PP No. 20 of 2026 confirms that the final income tax rate for taxpayers with specific gross turnover remains at 0.5%. The government has also clarified several professions no longer eligible for the 0.5% SME final income tax facility. According to Article 56(4) of PP No. 20 of 2026, the facility does not apply to individual taxpayers earning income from freelance services. This includes professionals such as lawyers, accountants, architects, doctors, consultants, notaries, land deed officials (PPAT), appraisers, actuaries, and similar experts. The same article also excludes creative professionals and certain services, including musicians, presenters, singers, comedians, film stars, soap opera actors, commercial models, directors, film crew, photo models, male and female models, actors, dancers, sculptors, painters, and other artists. Exclusions also apply to athletes, advisors, teachers, coaches, lecturers, counsellors, moderators, authors, researchers, translators, advertising agents, project supervisors or managers, intermediaries or customer finders, sales representatives, insurance agents, and distributors of multi-level marketing or direct sales companies. In addition to specific professions, Article 57(2) of PP No. 20 of 2026 outlines other taxpayer groups ineligible for the SME final income tax facility.