Taxes for CV and PT MSMEs No Longer Based on Turnover, Says DGT: Does Not Automatically Increase Burden

Jakarta, VIVA – The tax collection mechanism for micro, small, and medium enterprises (MSMEs) that have been removed from the 0.5% final income tax (PPh) facility, such as CV and PT business entities, will no longer be based on turnover value.

The Director General of Taxes, Bimo Wijayanto, explained that taxes will now be calculated based on net profit after deducting permitted operational costs. “Switching to the general mechanism does not automatically make the tax burden larger,” Bimo stated in a briefing on Tuesday, 9 June 2026.

Through Government Regulation (PP) Number 20 of 2026 regarding the Adjustment of Income Tax Regulations, the government, via the Directorate General of Taxes (DGT) of the Ministry of Finance, has excluded CVs and PTs from the 0.5% final PPh facility. Under the new regulation, the 0.5% final PPh can only be utilised by individual taxpayers, sole proprietorships (perseroan perorangan) established by one person, and cooperatives. Previously, this facility was available to cooperatives, limited partnerships (CV), firms, limited liability companies (PT), and Village-Owned Enterprises (BUMDes).

According to Bimo, the new regulation is an improvement to ensure that tax incentives are more targeted, simple, and sustainable. “This policy is designed to ensure that MSMEs have ample space to grow, drive regional economies, and create jobs without being burdened by complex tax administration,” said Bimo.

In addition to the shift from turnover-based to profit-based taxation for business entities like PT and CV, there are several other key points regulated in this policy. Firstly, the turnover threshold for utilising the 0.5% final PPh facility remains at Rp4.8 billion per year. Furthermore, the provision for turnover up to Rp500 million per year for individual taxpayers remains tax-free. Additionally, the 0.5% final rate facility can be used indefinitely, while for cooperatives, this facility can be utilised for four years from the date of registration.

“This aims to allow business owners to focus on developing their businesses without administrative burdens,” said Bimo.

The government is also anticipating loopholes for potential abuse, such as the practice of splitting businesses or forming multiple new entities to avoid normal tax rates. This strategy is implemented to ensure that tax incentives are truly received by growing businesses aiming to scale up.