Government Regulation Number 20 of 2026 is often seen as good news, and part of it is indeed true: the rate remains at 0.5 percent and the revenue ceiling stays at Rp4.8 billion. What has changed is not the numbers, but who is eligible to use it and until when. This regulation was established and enacted on April 22, 2026, as an amendment to PP 55/2022, and some existing users will lose their rights at the end of the 2026 Tax Year.
Three forms still allowed
Article 57 paragraph (1) of the amendment mentions three: individual taxpayers, individual corporate taxpayers established by one person, and domestic cooperatives. The requirement is the same, with gross revenue not exceeding Rp4.8 billion in one tax year.
What is missing from that list are limited partnerships, firms, limited liability companies other than individual corporations, as well as village-owned enterprises and joint village-owned enterprises.
Deadlines are no longer uniform
Article 59 of PP 55/2022, which previously regulated the time frame, has been removed. As a result, individuals and individual corporations can use this rate without a time limit, as long as the criteria are still met.
Cooperatives are different. Article 57 paragraph (2) letter f limits them to a maximum of four tax years from the year the cooperative is registered. The official explanation gives an example of a cooperative registered on May 2, 2028: the final rate applies for the 2028 tax year until 2031, after which starting in the 2032 tax year, it will use the rate in Article 17 paragraph (1) letter b considering Article 31E.
The 2026 Tax Year becomes a deadline for many
The transitional provisions in Article II contain deadlines that are easy to overlook:
- Individuals whose time frame ends in the 2024 Tax Year may still use the final rate for the 2025 and 2026 Tax Years.
- Individuals and individual corporations whose time frame ends in the 2025 Tax Year may still use it for the 2026 Tax Year.
- CVs, firms, PTs other than individual corporations, and village-owned enterprises whose time frame has not expired may use it until that time frame ends.
- Cooperatives registered before April 22, 2026, whose time frame ends between the 2024 and 2029 Tax Years, are subject to the final rate for the 2025 to 2029 Tax Years.
Income not eligible for the 0.5 percent rate still counts towards the ceiling
This is the part that often traps people. Income from individuals for services related to freelance work has never been included in the 0.5 percent scheme according to Article 56 paragraph (3). However, Article 58 paragraph (1) calculates the Rp4.8 billion ceiling from all gross revenue from businesses and freelance services, both final and non-final, including income earned abroad, and is measured from the previous tax year.
The list of freelance jobs in Article 56 paragraph (4) now includes content creators on online media, including influencers, celebrities, bloggers, and vloggers, in addition to teachers, trainers, moderators, advertising agents, insurance agents, and multi-level marketing distributors.
The official explanation uses the example of Ms. E: income as an insurance agent of Rp3.5 billion and catering business of Rp1.5 billion in 2026. Catering remains subject to the 0.5 percent rate that year, but because the total is Rp5 billion, she exits the scheme in the 2027 Tax Year.
Combining also applies to spouses who separate their assets or if the wife fulfills her tax obligations independently, including income from underage children, as well as all individual corporations they establish.
Once out, cannot return
Article 57 paragraph (4) emphasizes that those who exit due to exceeding Rp4.8 billion, due to the expiration of the cooperative's time frame, or due to choosing the general rate, cannot be subject to final income tax in subsequent tax years. Therefore, mapping your position before closing the books for 2026 is cheaper than finding out when preparing the tax return. To navigate its branches more quickly, a final income tax check tool for MSMEs is available that follows the order of the articles.
What remains unchanged: the first Rp500 million in revenue for individuals is still exempt from income tax, calculated cumulatively since the first tax period, and for couples with separate NPWPs, this limit applies to each. Self-reporting remains due by the 15th of the following month.
Sources
- PP Number 20 of 2026 on Amendments to PP Number 55 of 2022 (complete text and explanation), State Secretariat, LN 2026 Number 43.
- PP 20/2026: 0.5% Income Tax Rate for Individual MSMEs Applies Forever, Directorate General of Taxes, June 3, 2026.
- PP 20/2026 Provides a Transition Period, MSMEs Can Still Enjoy the 0.5 Percent Final Income Tax Rate, Hukumonline, June 12, 2026.
- MSME Tax Regulations Still Applicable in PP 20/2026, Pajakku, June 23, 2026.