JAKARTA. The government will no longer grant the 0.5% Final Income Tax (PPh) regime for MSMEs to business entities in the form of limited partnerships (CVs), general partnerships (firma), and general limited liability companies (PTs). The policy is stipulated under Government Regulation (GR) No. 20 of 2026.
Finance Minister Purbaya Yudhi Sadewa said the regulatory change is intended to prevent large businesses from abusing the MSME tax incentive.
According to Purbaya, the tax authority had identified a number of large companies that split their businesses into multiple entities so that each entity's annual revenue remained below the threshold required to qualify for the 0.5% Final MSME Income Tax.
"The trick was to split a large business into several companies. But with the Coretax system, we can now identify the ultimate beneficiaries. That won't work anymore. MSMEs should be for MSMEs—not for large businesses trying to benefit as well," Purbaya said in Jakarta on Sunday (May 31), as quoted by Bisnis.com.
Purbaya explained that such practices have become easier to detect following the implementation of the Coretax system. The system enables the tax authority to identify the ultimate beneficial owners of a business group, making it much more difficult for companies to divide their operations solely to qualify for tax incentives.
Focus on MSMEs
Under GR No. 20 of 2026, the government limits eligibility for the 0.5% Final Income Tax regime to individual taxpayers, single-shareholder limited liability companies (PT Perorangan), and cooperatives.
The policy is intended to restore the original purpose of the incentive, supporting micro, small, and medium-sized enterprises that genuinely need assistance to grow and improve their competitiveness.
According to Purbaya, businesses that have expanded beyond the MSME level should no longer rely on tax incentives specifically designed for smaller enterprises.
"Once you've moved up to the next level, you shouldn't keep asking for the lowest tax rate. Instead, you should be grateful. The tax you pay will help support the development of other MSMEs," he said.
Nevertheless, the government will provide a transition period for CVs, general partnerships (firma), and general PTs that are still entitled to the incentive under the previous regulation. They may continue to apply the 0.5% Final MSME Income Tax rate until their existing eligibility period expires. (KEN)
