The Indonesian government, through Finance Minister Purbaya Yudhi Sadewa, has confirmed that a new regulation on Final Income Tax (PPh Final) for MSMEs will be issued in the first half of 2026.
This regulation is a revision of Government Regulation No. 55 of 2022, which is currently in the finalization stage. Once completed, it will be signed by President Prabowo Subianto.
Current Regulation Overview
Under the existing rules, MSMEs are subject to a final income tax rate of 0.5% of gross revenue. However, this incentive is limited by a specific time period:
- Individual taxpayers: up to 7 years
- Entities (CVs, partnerships, cooperatives, etc.): up to 4 years
- Limited liability companies (PTs): up to 3 years
Example:
If an individual taxpayer has been registered since or before 2018, their eligibility for the 0.5% rate expired in 2024.
Current Issues
Despite the expiration of the incentive period for some taxpayers:
- Many MSMEs are still applying the 0.5% tax rate
- However, the legal basis has not yet been updated
- The revised regulation is still pending issuance
This situation creates uncertainty for MSMEs in fulfilling their tax obligations.
Proposed Changes
Through the upcoming revision, the government plans to:
- Remove the time limitation for applying the 0.5% final tax rate
- Extend the policy to:
- Individual taxpayers
- Sole proprietorships
This means MSMEs may continue to benefit from the 0.5% rate for a longer, potentially unlimited period.
Update on the Revision Process
Director General of Taxes Bimo Wijayanto stated that the revision process had to be repeated, which caused delays in its completion.
Key Takeaways
- The revised MSME tax regulation is currently being finalized
- The 0.5% final tax rate may be extended beyond current limits
- The policy aims to ease the tax burden and support MSME sustainability
Closing
MSME taxpayers are encouraged to stay updated on the latest regulatory developments to ensure compliance and make informed financial decisions. If you need assistance with MSME tax calculation or reporting, consider consulting a tax professional or using reliable tax services to stay compliant with the latest regulations.