On 22 April 2026, the government issued Government Regulation No. 20 of 2026 (GR 20/2026), amending Government Regulation No. 55 of 2022 (GR 55/2022) on income tax adjustments. The new rules redraw the boundaries of the 0.5% final income tax (PPh Final) facility that has long been the backbone of tax relief for micro, small, and medium enterprises (SMEs), tightening eligibility while removing a long‑standing time limit for individual business owners. 

The Updates 

GR 20/2026 narrows who can use the 0.5% final tax on gross turnover. From now on, only individual taxpayers, single‑shareholder limited liability companies (PT Perorangan), and cooperatives qualify. Partnerships (CV), general partnerships (Firma), conventional multi‑shareholder limited liability companies (PT), and village-owned enterprises (BUMDes) are excluded and must move to the standard corporate income tax regime. The turnover ceiling stays at IDR 4.8 billion a year. Further, GR 20/2026 expands gross turnover to include free-lance and foreign income, as well as pre‑discount revenue, making it easier for taxpayers to reach the IDR 4.8 billion threshold. 

One of the most notable shifts is the removal of the time limit that used to apply to individuals and PT Perorangan. Under the old rules, individuals could use the facility for up to seven years and PT Perorangan for four. GR 20/2026 scraps that cap: both groups can keep using the 0.5% rate if their turnover remains below IDR 4.8 billion. Cooperatives retain access through 2029. 

The regulation also closes a familiar loophole. If one person owns several PT Perorangan, their combined turnover is now added together. Once the total crosses IDR 4.8 billion, none of those entities can use the final tax facility going forward, a direct response to owners splitting operations into multiple smaller entities to stay below the threshold. 

Lastly, income earned from independent professional work: freelancers, athletes, insurance agents, brokers, and entertainers, among others, is excluded from the final tax scheme regardless of turnover because it is treated as personal professional income rather than enterprise activity. 

Impact on Existing SMEs 

For sole proprietors and individually owned micro and small businesses, the change works in their favour: removing the time cap means a long‑running business no longer gets pushed into standard corporate tax rates just because it has been operating for several years. That gives owners more predictable cash flow and one less compliance deadline to track. 

Businesses set up as CV or conventional PT face a tougher adjustment. Many smaller, family‑run operations chose these structures for liability protection or to satisfy bank or investor requirements, while still enjoying the 0.5% rate. They now must switch to standard corporate tax of 22% and take on full bookkeeping obligations, which raises both tax and accounting costs. Owners who had spread operations across several PT Perorangan to stay under the turnover limit will also find those entities combined for tax purposes, closing off a tactic many used to extend their eligibility. 

Existing SME taxpayers with a Surat Keterangan under GR 55/2022 can continue using it until its expiration in 2026, if they meet GR 20/2026 criteria, but must regularly review eligibility to ensure compliance with the updated requirements. 

The Impact for Taxpayers 

GR 20/2026 does not expand SMEs tax relief so much as redirect it. Individual taxpayers and PT Perorangan come out ahead, gaining open-ended access to the 0.5% rate if they stay under the turnover threshold. CV and conventional PT owners come out behind, losing a facility they had relied on for years and facing a costlier tax regime in its place. Business owners currently operating through a CV or PT should review their structure now, since the gap between the 0.5% final tax and standard corporate tax is wide enough to materially affect their bottom line. 

 

Contributor: Ichwan Sukardi, Consulting Practice