Indonesia has restructured its 0.5% final income tax regime under Government Regulation No. 20 of 2026 (PP 20/2026). Under the new regulation, most corporate entity forms can no longer use the 0.5% final tax that has applied to small businesses with annual revenue under IDR 4.8 billion since 2018.
Limited liability companies (PT), commanditaire vennootschap (CV), partnerships (firma), and village-owned enterprises (BUMDes) are all excluded from the regime under the new rules.
The 0.5% regime still applies to three categories:
- Individual taxpayers (Wajib Pajak orang pribadi)
- Perseroan Perorangan (single-person limited liability companies introduced under the Cipta Kerja Law)
- Cooperatives (koperasi), capped at 4 tax years from registration
Updated Eligibility for the 0.5% Regime
Under the previous framework (PP 55/2022), the 0.5% final tax was available to most small business entity types. PT (limited liability company), CV (commanditaire vennootschap), firma (partnership), and koperasi (cooperatives) could all use the regime for a limited number of years (3 years for PT, 4 years for CV/firma/koperasi, 7 years for individuals) provided their revenue stayed below IDR 4.8 billion.
PP 20/2026 narrows the regime significantly. The eligibility list now centers on the smallest, simplest business structures, with anti-avoidance rules attached to prevent the regime from being used as a tax-planning vehicle.
Two specific anti-avoidance rules are worth flagging:
- Aggregated revenue across multiple entities. Where an individual establishes multiple Perseroan Perorangan (single-person LLCs), the combined revenue across the individual and all their Perseroan Perorangan is tested against the IDR 4.8 billion threshold. Once the combined revenue exceeds the threshold, all of the entities lose access to the 0.5% regime, including any new Perseroan Perorangan established afterward.
- Same-service exclusion. A Perseroan Perorangan established by a professional (consultants, lawyers, doctors, notaries, and similar) to provide the same type of service as their personal freelance work cannot use the 0.5% regime. This closes a workaround where professionals were converting their personal professional income, taxed at progressive rates up to 35%, into business income taxed at 0.5%.
Influencers and Content Creators Now Treated as Freelance Workers
PP 20/2026 also updates the definition of pekerjaan bebas (freelance work) under Article 56(4) to explicitly include content creators on online media: influencers, selebgram (Instagram celebrities), bloggers, vloggers, and similar.
Income from these activities is now treated as freelance work, taxed at progressive personal income tax rates rather than the 0.5% final rate.
This is the first time these categories have been named directly in the Income Tax framework.
New Anti-Bribery Tax Rule
Alongside the changes to the 0.5% regime, PP 20/2026 introduces a new Article 20A stating that bribes, gratifications, and any other gifts as defined under Indonesia’s anti-corruption laws are not deductible expenses for income tax purposes. This explicitly includes payments to foreign public officials.
The General Explanation ties this directly to Indonesia’s accession to the OECD. The OECD has recommended that members explicitly disallow tax deductions for bribery payments, and PP 20/2026 brings Indonesia’s tax law in line with that standard.
What Happens to Current 0.5% Taxpayers
PP 20/2026 includes transitional rules for taxpayers currently using the 0.5% regime under the previous PP 55/2022 framework. The most practically important provisions:
- CV, firma, regular PT, and BUMDes (village-owned enterprises) currently using the 0.5% regime can continue under PP 55/2022 rules until their original eligibility period expires. Under PP 55/2022, that period was 3 tax years for PT and 4 tax years for CV, firma, and BUMDes, counted from when the entity began using the regime. Once that period ends, these entities must transition to regular corporate tax rates.
- Individuals whose 7-year period ended in 2024 or 2025 can use the regime through 2026 under the new rules, provided they still meet the threshold.
- Koperasi (cooperatives) whose original period under PP 55/2022 ends between 2024 and 2029 can continue under the new regime through their original end date.
That means, PT that began using the 0.5% rate in 2024 has until the end of Tax Year 2026 before transitioning. A CV that started in 2025 has until 2028. Entities should check their original registration date to determine when their transition obligation kicks in.
Access the full text of the PP 20/2026
Unsure how PP 20/2026 affects your business? Contact our Tax Compliance and Corporate Legal team in Indonesia to review your current entity structure and align your bookkeeping with the new requirements.
