BERITA TERKINI
JAKARTA, DDTCNews - After the long wait, the legal instrument underpinning the application of the 0.5% micro, small and medium enterprise (MSME) final income tax has finally been officially issued. The regulation in question refers to Government Regulation (Gov. Reg.) No. 20/2026. The topic drew significant attention from netizens throughout the past week.
Earlier this week, Minister of Finance, Purbaya Yudhi Sadewa, had indeed alluded to the delayed issuance of the regulation governing the MSME final income tax. He pledged to expedite the process.
As a result, toward the end of the week, Gov. Reg. 20/2026, which revises Gov. Reg. 55/2022, was finally issued. Under the new regulation, only individual taxpayers, corporate taxpayers in the form of sole proprietorships and cooperatives are now eligible to utilise the MSME final income tax scheme.
Resident taxpayers that have a certain gross turnover which is subject to final Income Tax referred to in Article 56 paragraph (1) are individual taxpayers; and corporate taxpayers in the form of sole proprietorships incorporated by 1 person and cooperatives that receive or accrue income with gross turnover not exceeding IDR4.8 billion in 1 tax year,” reads Article 57 paragraph (1) of Gov. Reg. 20/2026.
The gross turnover referred to in Article 57 paragraph (1) of Gov. Reg. 20/2026 refers to, first, the aggregate amount of turnover derived from business activities or services relating to independent personal services within 1 year from the last tax year preceding the relevant year, including income subject to both non-final and final income tax, as well as foreign-sourced gross turnover.
Second, remunerations in the form of money or monetary value received or accrued from services relating to independent personal services prior to deductions for sales discounts, cash discounts and/or similar deductions.
Although the utilisation of the MSME final income tax is now restricted to individual taxpayers, sole proprietorships and cooperatives, individual taxpayers and corporate taxpayers in the form of sole proprietorships may now benefit from the scheme without any time limitation, as Gov. Reg. 20/2026 simultaneously deletes Article 59 of Gov. Reg. 55/2022.
“Article 59 is deleted,” reads Article I Number 6 of Gov. Reg. 20/2026.
Specifically for corporate taxpayers in the form of cooperatives, the utilisation period of the MSME final income tax remains capped at a maximum of 4 years.
“Not included in the taxpayers referred to in paragraph (1) in the event that ... corporate taxpayers in the form of cooperatives referred to in paragraph (1) subparagraph b, where a period of 4 tax years has elapsed from the tax year the taxpayers concerned are registered,” reads Article 57 paragraph (2) of Gov. Reg. 20/2026.
As such, what is the fate of corporate taxpayers in the form of limited partnerships (commanditaire vennotschaap/CV in Dutch), firms, limited liability companies (perseroan terbatas/PT in Indonesian) and state-owned enterprises (badan usaha milik negara/BUMN in Indonesian)/village-owned enterprises (badan usaha milik desa/BUMD in Indonesian) that had utilised the MSME final income tax pursuant to Gov. Reg. 55/2022?
Article II Number 1 letter e of Gov. Reg. 20/2026 stipulates that such corporate taxpayers may continue to be subject to the MSME final income tax pursuant to Gov. Reg. 55/2022, provided that their utilisation period has not yet expired.
“... may be subject to final Income Tax until the certain period ends, insofar as the taxpayers fulfil the criteria to be subject to Final Income Tax pursuant to Gov. Reg. 55/2022 concerning Adjustments to the Regulation in the Field of Income Tax,” reads an excerpt from Article II Number 1 letter e of Gov. Reg. 20/2026.
Further, Gov. Reg. 20/2026 also contains transitional provisions extending the validity period of the MSME final income tax for individual taxpayers, sole proprietorships and cooperatives already utilising the MSME final income tax under Gov. Reg. 55/2022.
If the utilisation period of the MSME final income tax for individual taxpayers expired in the 2024 tax year, such taxpayers may continue utilising the scheme for the 2025 and 2026 tax years.
Further, if the utilisation period for individual taxpayers and sole proprietorships expired in 2025, such taxpayers may continue to utilise the MSME final income tax for the 2026 tax year.
For cooperatives registered prior to the entry into force of Gov. Reg. 20/2026 whose MSME final income tax utilisation period expires between 2024 and 2029, such taxpayers shall remain subject to the MSME final income tax for the 2025 through 2029 tax years.
Promulgated on 22 April 2026, Gov. Reg. 20/2026 was declared to come into force thereafter.
Apart from developments concerning the MSME final income tax, several other issues also merit attention over the past week. These included findings by the Audit Board of the Republic of Indonesia (Badan Pemeriksaan Keuangan/BPK in Indonesian) regarding delays in tax audits, updates on the selection process for Supreme Court justice candidates, allegations of transfer pricing manipulation and the preparations by the Directorate General of Taxes (DGT) for implementing cooperative compliance.
The Audit Board of the Republic of Indonesia noted that the DGT has yet to fully conduct audits within the specified period.
Through its Audit Report (LHP) on the Performance of the Supervision and Audit in Supporting Tax Revenue Optimisation for 2023–2025 at the DGT, the Audit Board found that certain audits had exceeded the time limits prescribed under MoF Reg. 17/2013 and MoF Reg. 15/2025.
“The period for field audit assessment is calculated from the issuance of the notice of audit until the issuance of the notice of audit findings (surat pemberitahuan hasil pemeriksaan/SPHP in Indonesian), namely 6 months pursuant to MoF Reg. 17/2013 and 5 months pursuant to MoF Reg. 15/2025,” the Audit Board wrote.
The Judicial Commission (Komisi Yudisial/KY in Indonesian) announced the names of Supreme Court justice candidates (calon hakim agung/CHA in Indonesian) who passed the quality selection stage.
Of the 36 candidates declared to have passed the quality selection, 6 are candidates for the tax-specific state administrative (tata usaha negara/TUN in Indonesian) chamber. Accordingly, 5 tax-specific state administrative chamber candidates failed to pass the quality selection.
“Candidates whose names are listed above are entitled to proceed to the health and personality assessment stage,” said the Judicial Commission spokesperson, Anita Kadir.
Minister of Finance, Purbaya Yudhi Sadewa, clarified the case involving 10 crude palm oil (CPO) exporting companies allegedly engaged in under-invoicing and transfer pricing manipulation practices.
Of the 10 companies, Purbaya confirmed that 2 are currently under investigation by law enforcement authorities for allegedly engaging in such fraudulent practices.
“Those two [CPO companies] are indeed under investigation,” he told reporters at the Office of the Coordinating Ministry for Economic Affairs.
The DGT has prepared mechanisms for the application of the cooperative compliance programme. The programme is expected to commence with voluntary registration by taxpayers.
Based on such registration, the DGT will assess taxpayers’ tax control framework (TCF) as well as compliance risks. The assessment is to be implemented using the compliance risk management (CRM) system that has already been developed.
“The DGT has a system in place, developed for nearly a decade, namely the CRM machine. We will continue refining it. This measurement will, of course, be based on CRM indicators embedded in our analytics,” stated Director General of Taxes, Bimo Wijayanto. (sap)
