Regulation Watch · Tax Compliance · Indonesia
Indonesia Changes the 0.5% Final Income Tax Rules
PP 20/2026 changes the income-tax framework for businesses with limited annual turnover, including who may use the 0.5% final tax regime.
- Published
- 22 April 2026
- Effective
- 22 April 2026
Who is affected
Small businesses, individual entrepreneurs, single-person companies, cooperatives, limited-liability companies, and their finance teams.
Practical impact
The 0.5% final income-tax treatment continues for eligible individual taxpayers, domestic cooperatives, and qualifying single-person companies with turnover up to IDR 4.8 billion. Ordinary limited-liability companies are no longer eligible and must assess the normal corporate income-tax framework.
The regulation amends PP 55/2022. The practical impact depends on legal form, turnover, and the taxpayer's prior use of the final regime.
A company leaving the final regime should not wait until annual filing to adjust. Its accounting records, instalment calculations, and tax planning may need to change during the year.
Required action
- Confirm the taxpayer's legal form and eligibility for the final regime.
- Recalculate tax forecasts if the business must move to ordinary corporate income tax.
- Upgrade bookkeeping and expense documentation before the next corporate tax filing.