Government Regulation No. 20 of 2026 (GR-20/2026) introduces several important changes to the provisions governing Final Income Tax for Taxpayers with certain gross turnover thresholds, which were previously regulated under Government Regulation No. 55 of 2022 (GR-55/2022). The changes include the following:
1. 0,5% Tax Rate Without a Time Limitation
GR-20/2026 clarifies the provisions of GR-55/2022, whose utilization period had already expired. Under the latest regulation, Individual Taxpayers and Sole Shareholder Companies may continue to apply the 0.5% final tax rate without any time limitation, provided they meet the criteria for Final Income Tax treatment. Cooperatives, however, are permitted to use the 0.5% rate only until 2029.
Different treatment applies to other business entities such as Limited Partnerships (CVs), Firms, Limited Liability Companies, Village-Owned Enterprises, and Joint Village-Owned Enterprises. These entities are no longer allowed to apply the 0.5% rate after 2026, except where their permitted utilization period has not yet expired.
Although newly enacted, this regulation applies retroactively to Individual Taxpayers and Sole Shareholder Companies, subject to certain conditions.
2. Clarification on the Calculation of Gross Turnover
Article 58 of GR-20/2026 provides clarification on the calculation of the gross turnover threshold of IDR 4.8 billion as follows:
• The total gross turnover from business income and income from independent professional services in one fiscal year is calculated based on the most recent tax year, including income subject to both non-final and final income tax;
• Gross turnover earned or received from overseas sources must be included;
• Gross turnover of a husband, wife, and dependent minor children must be combined, even if the wife has elected a separate property regime (PH) or separate tax filing status (MT);
• The gross turnover of an individual taxpayer must be combined with the entire gross turnover of any Sole Shareholder Companies owned by that individual.
If, in a particular year, the gross turnover exceeds IDR 4.8 billion, both the individual taxpayer and the Sole Shareholder Company will no longer be eligible to use the 0.5% tax rate in the following year. However, for the current year in which the threshold is exceeded, income tax may still be calculated using the 0.5% rate.
3. Exclusions from the Application of the 0.5% Final Income Tax
The following types of income are not considered business income eligible for the 0.5% Final Income Tax regime:
a. income Received by Individual Taxpayers from Independent Professional Services, including:
• professionals engaged in independent practice, such as lawyers, accountants, architects, doctors, consultants, notaries, land deed officials, appraisers, actuaries, and other similar professionals;
• musicians, hosts, singers, comedians, film actors, television actors, commercial actors, directors, film crew members, models, stage performers, dancers, sculptors, painters, online content creators (influencers, social media influencers, bloggers, vloggers, and similar professions), and other artists;
• athletes;
• advisors, teachers, trainers, lecturers, counsellors, moderators, and similar professions;
• authors, researchers, translators, and similar professions;
• advertising agents;
• project supervisors or project managers;
• intermediaries or customer finders;
• sales representatives;
• insurance agents; and
• distributors engaged in multi-level marketing, direct selling, or similar activities.
b. Income received or earned from abroad for which tax is payable or has already been paid overseas.
c. Income that has already been subject to Final Income Tax under separate tax regulations.
d. Income specifically exempted from taxation under applicable tax laws.
4. Expenses That Are Not Deductible for the Purpose of Earning, Collecting, and Maintaining Income
GR-20/2026 introduces Article 20A, which expressly states that expenditures related to bribery, gratuities, or any other form of improper payments that indicate corruption or bribery offenses (including payments made to foreign public officials) are not deductible as expenses in calculating Taxable Income.
This Government Regulation is effective on April 22, 2026.
For Tax Service assistance, please contact:
Rani Widianti
T. (+6221) 2222-0200
Alvina Oktavia
T. (+6221) 2222-0200
E. alvina.oktavia@shinewing.id
