New Rules Exclude Independent Personal Services from 0.5% Final Tax

In fulfilling tax obligations, a person who provides services, for and on their own behalf, and derives income not bound by an employment relationship, is referred to as an individual taxpayer conducting independent personal services.

By default, pursuant to Article 56 paragraphs (1) and (2) of Gov. Reg. 55/2022, business income received by a resident taxpayer with a certain gross turnover is subject to 0.5% final income tax, except for income stipulated under Article 56 paragraph (3) of Gov. Reg. 55/2022.

Income under Article 56 paragraph (3) of Gov. Reg. 55/2022 comprises: (a) income received/accrued by an individual taxpayer from services in connection with independent personal services; (b) income received/accrued overseas, the tax on which is payable/has been paid overseas; (c) income already subject to final income tax under separate provisions; and (d) income excluded as a taxable object.

Reading Article 56 paragraph (3) subparagraph a of Gov. Reg. 55/2022 alone, one might conclude that all individual taxpayers conducting independent personal services are not permitted to use the 0.5% final income tax rate. However, we also need to refer to the subsequent provision, namely Article 56 paragraph (4) of Gov. Reg. 55/2022.

That article sets out several service provider professions in connection with independent personal services, namely: (a) professionals conducting independent personal services, comprising lawyers, accountants, architects, physicians, consultants, notaries, conveyancers, appraisers and actuaries.

Further, (b) musicians, presenters, singers, comedians, film stars, soap opera stars, commercial stars, directors, film crews, photo models, models, actors/actresses and dancers; (c) sportsmen; (d) advisors, teachers, trainers, public speakers, extension workers and moderators.

Next, (e) authors, researchers and translators; (f) advertising agencies; (g) project supervisors or managers; (h) intermediaries; (i) salespeople; (j) insurance agents; (k) distributors of multi-level marketing or direct selling companies and other similar activities.

Most recently, there have been important changes that independent workers must be aware of. With effect from 22 April 2026, through Gov. Reg. 20/2026, the government amended the provisions under Article 56 paragraph (4) of Gov. Reg. 55/2022 by adjusting or adding types of professions, thereby harmonising them with MoF Reg. 168/2023.

For example, the phrase 'and other similar professionals' has been added to subparagraph a. This implies that all professionals similar to lawyers, accountants, architects, physicians, consultants, notaries, conveyancers, appraisers and actuaries are not permitted to use the 0.5% final income tax rate either.

Further, several additional types of professions not permitted to use the final income tax rate have been added to subparagraph b, namely 'sculptors, painters, content creators on media shared online (influencers, celebgrams, bloggers, vloggers and the like) and other artists'.

There is also an addition to subparagraph d with the phrase 'and other similar professions'. Accordingly, all professions similar to advisors, teachers, trainers, public speakers, extension workers and moderators are likewise not permitted to use the 0.5% final income tax rate.

Subsequently, subparagraph e has been supplemented with the phrase 'and other similar professions'. This implies that all professions similar to authors, researchers and translators are not permitted to use the 0.5% final income tax rate either.

Subparagraph h has been supplemented with the phrase 'referral agents'. Accordingly, intermediaries or referral agents are not permitted to use the 0.5% final income tax rate. Meanwhile, subparagraphs c, f, g, i, j and k remain unchanged.

Therefore, the interpretation is that if an individual taxpayer practises a profession other than those listed in the positive list of Article 56 paragraph (4) of Gov. Reg. 55/2022, as amended by Gov. Reg. 20/2026 (for example, detective services, bodyguard services, freelance drivers or other professions), they may calculate their income tax by applying the 0.5% final income tax rate.

Conversely, those practising professions listed in the positive list above are not permitted to use the 0.5% final income tax rate. They are therefore required to apply the rate under Article 17 paragraph (1) subparagraph a of the Income Tax Law. Nevertheless, if their turnover is below IDR4.8 billion per year, such taxpayers are entitled to use recording and apply deemed profit (NPPN).

Under the deemed profit, net income is calculated using the formula: annual gross turnover (without deducting expenses) × deemed profit rate %. An application to use the deemed profit must be submitted via coretax no later than 3 months from the date of registration or from the end of the tax year. If the deadline is missed, the taxpayer is required to maintain bookkeeping.

To distinguish between a freelancer and an entrepreneur, one may refer to the elucidation of Article 56 paragraph (4) of Gov. Reg. 55/2022, as amended by Gov. Reg. 20/2026. Pursuant to the elucidation, if such services are rendered in the form of a business, the income from that business does not constitute income from services in connection with independent personal services.

For example, a person who possesses musical skills. If he/she teaches music for and on his/her own behalf to derive income not bound by an employment relationship, he/she renders services in connection with independent personal services. This implies that his/her income from teaching music is excluded from business income subject to final income tax.

However, if he/she runs a music course business and employs other persons, he/she does not conduct independent personal services but rather conducts a business. Accordingly, to calculate their income tax, he/she is permitted to use the 0.5% final income tax rate (if his/her turnover is below IDR4.8 billion per year).

In respect of Gov. Reg. 20/2026, with the repeal of Article 59 of Gov. Reg. 55/2022, the time-limited period for individual taxpayers and sole proprietorships to use the final income tax rate has been removed (no longer restricted). In addition, there are also relaxation measures in the transitional provisions.

One of the transitional provisions stipulates that individual taxpayers and sole proprietorships, whose utilisation period of the final income tax expired in 2024 (individual taxpayers) and 2025 (individual taxpayers and sole proprietorships), may be subject to 0.5% final income tax for the 2025 and 2026 tax years, provided the taxpayer concerned fulfils the criteria pursuant to Gov. Reg. 55/2022.