Definition: Excluded Income
The 0.5% final PPh under GR 23/2018 (as amended by GR 55/2022 and refined by GR 20/2026) is designed to ease the tax burden on Indonesian MSMEs. The rate applies only to income from specific business activities with annual turnover below IDR 4.8 billion. Not every income earned by an MSME taxpayer automatically qualifies.
The exclusion list matters for two reasons. First, it protects state revenue from misuse of the facility. Second, it protects taxpayers from audits and penalties: misclassification means underpaid tax, and the DGT will issue a tax collection letter (STP) with interest charges.
Legal Basis
GR 20/2026 is the principal reference for the current exclusion list. Supporting rules:
- Article 4 of GR 55/2022 in conjunction with Article 4 of GR 20/2026, on the object of final MSME PPh
- Article 5 of GR 55/2022 in conjunction with Article 5 of GR 20/2026, on income excluded from final MSME PPh
- Articles 56 and 57 of GR 20/2026, on subject scope and the definition of independent profession
- Article 4 paragraph (2) of the Income Tax Law, on income subject to final PPh
- MoF Regulation 168/2023, on Article 21/26 withholding technical guidance (for independent professions)
- MoF Regulation 81/2024, on general Coretax administrative procedures
List of Excluded Income
Under Article 5 of GR 20/2026 and supporting rules, the following income may not use the 0.5% final rate.
1. Income from Services Tied to an Independent Profession
Article 57 of GR 20/2026 lists professions in this category, including:
Experts performing independent professions: lawyers, accountants, architects, doctors, consultants, notaries, Land Deed Officials (PPAT), appraisers, actuaries, and similar experts.
Musicians, presenters, singers, comedians, film actors, soap-opera actors, commercial actors, directors, film crew, photo models, runway models, drama actors, dancers, sculptors, painters, and other artists.
Content creators on digital media: influencers, celebgrams, bloggers, vloggers, and similar. This is the most important addition in GR 20/2026.
Athletes, advisors, teachers, trainers, preachers, extension workers, and moderators.
Authors, researchers, translators. Advertising agents. Project supervisors and managers. Intermediaries. Door-to-door sellers. Insurance agents. MLM and direct-selling distributors and similar activities.
Consequence: income from these services remains under Article 21/26 PPh (if withheld by the payor) or progressive Article 17 PPh through the annual return. If turnover is below IDR 4.8 billion, individual taxpayers may elect NPPN under PER-17/PJ/2015.
2. Employment Income
Employee income, whether salary, wages, honorarium, allowances, or other employment-related payments, is taxed under Article 21 PPh. It does not fall under the MSME final scheme.
3. Income Already Subject to Other Final PPh
Examples include:
- Income from transfer of land and/or buildings (GR 34/2016)
- Income from leasing land and/or buildings (GR 34/2017)
- Income from construction services (GR 9/2022 as amended by GR 49/2022)
- Dividends, deposit interest, bond interest, lottery prizes, and stock-exchange share sales
All of these have their own final rates under Article 4 paragraph (2) of the Income Tax Law. They cannot be stacked with the 0.5% final PPh.
4. Foreign-Source Business Income
Income from offshore business already taxed in the source jurisdiction is not subject to the 0.5% final PPh in Indonesia. Individual or corporate taxpayers continue to report it on the annual return through the foreign tax credit (KPLN) mechanism under Article 24 of the Income Tax Law.
5. Income Excluded from PPh Objects
Income classified as non-objects under Article 4 paragraph (3) of the Income Tax Law, such as inheritance, qualifying gifts, and government assistance, is naturally not subject to the 0.5% final PPh.
Rates and Thresholds: What Still Qualifies
After removing excluded items, the remainder is business income that may legitimately be taxed at the 0.5% final rate. The framework:
Individual taxpayers enjoy a non-object facility on the first IDR 500 million of annual turnover (Article 60 of GR 20/2026 in conjunction with Article 7 of the Income Tax Law). Above IDR 500 million, the 0.5% rate applies up to IDR 4.8 billion of annual turnover.
Sole-proprietor PTs and cooperatives do not receive the IDR 500 million facility. The 0.5% rate applies from the first rupiah up to IDR 4.8 billion of annual turnover.
Once cumulative turnover exceeds IDR 4.8 billion in a tax year, the taxpayer moves to Article 17 PPh for the remainder of that year and must keep books of account from the following year.
How to File and Separate Income
In Coretax, taxpayers must separate income by Business Field Classification (KLU) when depositing 0.5% final PPh via the e-Bupot Unifikasi form. Practical steps:
First, audit income sources over the last three months. Separate into: (a) pure MSME business, (b) independent-profession services, (c) other final-rate income, (d) foreign income.
Second, for category (b), use a non-MSME KLU code and pay via Article 21/26 PPh or Article 17 PPh. Not via the 0.5% form.
Third, for category (c), confirm that withholders have applied the proper final rate. Attach withholding slips to the annual return.
Fourth, file the annual return covering all categories, including final-taxed income, in the appropriate attachment.
Worked Example
Ms. Sari is an individual taxpayer who owns a baking-supplies shop with IDR 600 million in annual turnover. She is also active as a food vlogger and earns IDR 300 million per year from endorsements.
Calculation under GR 20/2026:
Shop turnover IDR 600 million. After the IDR 500 million non-object facility, IDR 100 million is subject to 0.5% final PPh = IDR 500 thousand per year.
Vlogger income of IDR 300 million falls under independent profession. It cannot use 0.5% final PPh. Ms. Sari's option: apply NPPN with a 50% net rate (per PER-17/PJ/2015 for entertainment services). Net income IDR 150 million. After PTKP TK/0 of IDR 54 million, taxable income IDR 96 million. Article 17 PPh = 5% x IDR 60 million + 15% x IDR 36 million = IDR 3 million + IDR 5.4 million = IDR 8.4 million per year.
Total PPh for Ms. Sari: IDR 8.9 million per year. If she had wrongly placed her vlogging income under 0.5% final, she would only have paid IDR 1.5 million. The IDR 7.4 million shortfall would become underpaid tax, and the DGT would issue an STP with interest.