Summary
Government Regulation 20 of 2026 (GR 20/2026) fundamentally redraws Indonesia's 0.5% Final PPh map for MSMEs. Eligible subjects narrow to individual taxpayers, Sole Proprietor PTs (PT Perorangan), and cooperatives. The IDR 4.8 billion annual threshold is now calculated on an aggregate basis, covering an individual taxpayer's revenue plus all Sole Proprietor PTs they own, as well as combined spouse revenue. This guide walks through legal basis, eligible subjects, calculation, rates, filing, examples, and FAQs to help MSMEs adapt.
What Is Final PPh for MSMEs
Final PPh for MSMEs is an income tax scheme that imposes a 0.5% rate on the gross revenue of certain businesses as a final tax. Final means the tax already paid cannot be credited later and is not combined with other income when computing year-end PPh.
The facility was designed as an administrative bridge for MSMEs not yet ready for full bookkeeping. The tax base is monthly gross revenue rather than net income. Simple by design, suitable for small-scale businesses without mature accounting systems.
Legal Basis
The legal framework for MSME Final PPh after GR 20/2026 comprises:
- Law 7/2021 on Harmonization of Tax Regulations (UU HPP), articles addressing MSME Final PPh.
- Law 36/2008 on Income Tax, Article 4 paragraph (2) as the basis for final PPh imposition.
- GR 20/2026, particularly Article 57 paragraph (2) on eligible subjects and revenue aggregation, including letter e on anti firm splitting.
- GR 55/2022 as the predecessor regulation, parts of which are now superseded.
Article 57 paragraph (2) letter e of GR 20/2026 is the key provision: the IDR 4.8 billion threshold is calculated on the total revenue of an individual taxpayer together with all Sole Proprietor PTs they own.
Subjects Eligible for the 0.5% Rate
After GR 20/2026, only three categories of subject may use the 0.5% final PPh rate:
- Individual Taxpayers running a business or independent profession with gross revenue up to IDR 4.8 billion per year.
- Sole Proprietor PTs, the single-founder limited liability company form introduced under the Job Creation Law.
- Cooperatives meeting the gross revenue criterion.
Subjects EXCLUDED from the final regime are:
- CVs (limited partnerships)
- Firmas (general partnerships)
- Conventional PTs (limited liability companies founded by more than one founder)
- BUMDes (Village-Owned Enterprises)
These entities must move to the standard 22% corporate PPh regime under Article 17 paragraph (1) letter b of the Income Tax Law.
Rates and Limits
The MSME final PPh rate remains 0.5% of gross revenue. What changes is how the IDR 4.8 billion threshold is calculated.
| Component | Old (GR 55/2022) | New (GR 20/2026) |
|---|---|---|
| Threshold | IDR 4.8 billion per entity | IDR 4.8 billion aggregate |
| Rate | 0.5% | 0.5% |
| Entity subjects | Includes CV, Firma, PT, BUMDes | Only Sole Proprietor PT and cooperatives |
| Individual + Sole Proprietor PT aggregation | Not explicit | Mandatory |
| Spouse aggregation | Separate without marital agreement | Mandatory |
| Facility duration | 7 years individual, 4 cooperative, 3 PT | Per implementing rules |
How to Calculate and Pay
The MSME final PPh mechanism follows this flow:
- Calculate monthly gross revenue from all goods and services sales.
- Multiply by 0.5% to obtain PPh payable for that month.
- Pay via Coretax using the MSME Final PPh tax type code (411128/420).
- Report in the Annual Tax Return as part of the individual or corporate filing.
For individual taxpayers who own a Sole Proprietor PT, an additional step is required: consolidate the revenue of both entities first. If the aggregate exceeds IDR 4.8 billion, stop using the final rate and move to general-rate calculation from the month the threshold is crossed.
Case Examples
Case 1: Aggregation of Individual Taxpayer and Sole Proprietor PT
Budi is a freelancer with IDR 3 billion annual revenue. He also owns a Sole Proprietor PT for an online retail business with IDR 2.5 billion annual revenue.
Old rule: both entitled to 0.5% final rate. Total PPh = (3B + 2.5B) x 0.5% = IDR 27.5 million.
New rule (GR 20/2026): Aggregate = IDR 5.5 billion, exceeding the IDR 4.8 billion threshold. Both entities lose the final facility and move to general-rate calculation on net income.
Case 2: Married Couple
Andi owns a coffee shop with IDR 3 billion annual revenue. His wife Sari owns a catering business with IDR 2.5 billion annual revenue.
New rule: revenues are combined to IDR 5.5 billion. Both lose the final facility and must move to the general PPh rate.
Case 3: Conventional PT
PT Sinar Jaya (founded by three shareholders) generates IDR 3 billion annual revenue. Previously used the 0.5% final rate.
After GR 20/2026: conventional PT is excluded from the final regime. PT Sinar Jaya must compute corporate PPh at 22% on net income.
How to File
Individual taxpayers and Sole Proprietor PTs continue to file annual returns via Coretax. What changes:
- Individual taxpayers with a Sole Proprietor PT must disclose ownership information in the return''s attachments.
- Aggregate revenue reporting becomes part of the self-assessment.
- Once in the general regime, use form SPT 1770 (individual) or SPT 1771 (corporate) with full financial statements.