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THE INDONESIAN government has officially enacted Government Regulation (PP) Number 20 of 2026 concerning Adjustments to Income Tax Regulations, which revises PP Number 55 of 2022.
One of the fundamental changes in this regulation is the reaffirmation of who is eligible to utilize the 0.5% Final Income Tax (PPh) facility, previously known as the special rate for MSMEs.
In PP 20/2026, the 0.5% Final PPh facility is prioritized for individual taxpayers, sole proprietorships (Public Corporations) established by one person, and cooperatives with annual turnover not exceeding IDR4.8 billion. Business entities such as CVs, firms, non-individual PTs, and Village-Owned Enterprises (BUMDes) are no longer eligible to utilize this scheme.
For businesses with turnover below IDR 4.8 billion, the government continues to provide incentives in the form of a 50% reduction from the normal 22% rate, effectively imposing an income tax rate of 11%.
“The final income tax rate for MSMEs remains at 0.5% and has not been increased. Government Regulation 20/2026 prioritizes this facility for those who truly meet the MSME criteria, while also providing clearer legal certainty for all taxpayers,” said Maman Abdurrahman, Minister of Micro, Small, and Medium Enterprises.
Government Regulation 20/2026 also clarifies the types of income that are not eligible for the 0.5% final income tax facility for MSMEs, including income from freelance work. This provision covers a number of professions, including digital content creators such as influencers, Instagram celebrities, bloggers, vloggers, and other similar professions.
Responding to the impact of this regulation on the creative economy (Ekraf) community, Minister of Creative Economy Teuku Riefky Harsya stated that his office would gather input from cross-subsector associations before voicing the interests of creative economy activists to the relevant ministries.
“We will discuss with the creative economy ecosystem to understand the impact of this policy. The input will inform coordination with the Ministry of Finance so we can provide a more comprehensive response,” said Teuku Riefky.
The government emphasized that this regulation is part of an effort to create a fair taxation system, while still considering the interests of all business actors, including those in the creative economy sector. [traveltext.id]
