JAKARTA, JOURNALARTA.COM – UMKM tax will continue to use the final 0.5% rate and the Rp4.8 billion annual turnover threshold under Government Regulation (PP) No. 20 of 2026. The Directorate General of Taxes (DJP) at the Finance Ministry said the new rule was drafted to provide certainty, simplify administration, and keep small businesses room to grow.
This policy matters for millions of UMKM operators across the country. With clearer rules, they get certainty on their tax burden and can plan their businesses without facing sudden changes to the tax scheme.
UMKM tax 2026 remains in place
Director General of Taxes Bimo Wijayanto said the government is not scrapping the 0.5% Final Income Tax facility. He said the policy is being refined so it is more targeted, harder to misuse, and still aligned with the needs of growing small businesses.
“From the beginning, the government has continued to support UMKM through policy evolution, starting with PP 46/2013 with a 1% rate, PP 23/2018 with a 0.5% rate, and then PP 55/2022. After a thorough evaluation, PP No. 20 of 2026 was introduced so this support can be even fairer and more targeted,” Bimo said.
Under the new scheme, individual taxpayers with annual turnover below Rp500 million remain exempt from tax. The rule is a crucial buffer for small traders, home-based workers, and micro businesses that are just starting out.
For turnover above that threshold and up to Rp4.8 billion a year, the 0.5% final rate still applies. DJP stressed that the ceiling has not changed.
Administration is made simpler
PP No. 20 of 2026 also cuts administrative complexity. The 0.5% final rate facility can now be used without a time limit by individual taxpayers and single-shareholder private companies that meet the requirements. For cooperatives, the facility applies for four years from the date of initial registration.
For business owners, that certainty is vital. Many UMKM operators still struggle to split their time between managing transactions, inventory, employees, and tax obligations. When procedures are simplified, more energy can go into production and sales.
DJP is also tightening supervision to close loopholes for abuse. Practices such as splitting turnover, setting up multiple entities, or manipulating business structures solely to enjoy the lower rate will face closer monitoring.
From turnover tax to profit tax
The rule also explains the transition for certain business entities, including limited liability companies (PT) and partnerships (CV), once they enter the general tax system. Under the general scheme, tax is calculated from net profit, not gross turnover.
That means the tax burden does not automatically jump when a business leaves the final-tax regime. Turnover must first be reduced by legitimate operating costs before tax is calculated. This is important because many UMKM owners assume that moving to a general scheme always means a heavier tax bill.
“The government wants to be present not only as a regulator, but as a partner accompanying the journey of business owners. We want to make sure our UMKM transform into businesses that are stronger, more independent, and more competitive,” Bimo said.
According to DJP, the changes will be rolled out through a transition period, outreach, and on-the-ground assistance. Tax offices across Indonesia are being asked to actively educate business owners on when they can stay under the final rate and when they must move into the general scheme.
For readers, the rule sends two messages. First, the state is still protecting UMKM tax so it does not burden small businesses. Second, the government wants a cleaner and more targeted tax base, so the incentive does not go to parties that no longer deserve the facility.
DJP urges UMKM operators to use official consultation services at the nearest tax office or the tax.go.id information channel to confirm their business status, turnover, and the appropriate tax scheme. “We are ready to assist,” Bimo said.
📝 Leave a Comment
Comment as . Reviewed by an admin before it appears.