Tax Update · July 2026
Indonesia Just Changed the Tax Rules for New PT PMA Companies
If you are planning to set up a PT PMA and need to understand PT PMA tax in Indonesia for 2026, there is a change you need to factor into your planning from day one. In April 2026, the Indonesian government issued Government Regulation No. 20 of 2026 — known as PP 20/2026 — which removes the 0.5% Final Income Tax scheme as an option for newly incorporated PT and PT PMA companies. It is a meaningful shift, but one that is straightforward to understand once you know the full picture.
Regulation: PP 20/2026 · Effective: 22 April 2026 · Applies to: Newly incorporated PT & PT PMA companies
Old Final Tax Rate
0.5%
On gross revenue — no longer available to new PT PMA
New Standard CIT Rate
22%
On net taxable profit from day one
Article 31E Relief
11%
Effective rate on first IDR 4.8B revenue if eligible
Background
What Was the 0.5% Final Tax?
Since 2018, Indonesia has offered a simplified income tax scheme for small businesses — commonly called the UMKM Final Tax, or PPh Final. Under this regime, any business with annual gross revenue below IDR 4.8 billion (roughly USD 290,000) could pay a flat rate of just 0.5% on total turnover, regardless of profitability.
For a PT PMA in its early years, this was genuinely attractive. There was no need to calculate net profit, prepare detailed financial statements, or track deductible expenses. Instead, you simply paid 0.5% of revenue — simple, predictable, and inexpensive. This was particularly useful for foreign investors still finding their feet in the Indonesian market.
Under the previous framework — PP 55/2022 — PT companies that entered the scheme were eligible to use it for up to 3 tax years from first use. As a result, many foreign-owned companies took advantage of this during their early stage of operations.
In summary: The 0.5% Final Tax was designed as a breathing space for genuine micro and small businesses — new entrepreneurs who needed simplicity while they found their footing, not sophisticated corporate structures with foreign shareholders. Over time, however, the scheme became attractive to a wider range of entities, some of which used it as a deliberate tax planning tool rather than a temporary support mechanism.
The Change
What PP 20/2026 Changed — and What It Didn't
Effective 22 April 2026, PT PMA companies incorporated after this date are no longer eligible to enter the 0.5% Final Tax scheme at all. The same applies to standard PT, CV (limited partnerships), Firma (partnerships), and BUMDes (village-owned enterprises). However, it is equally important to understand what the regulation does not change.
- →0.5% Final Tax on gross revenue
- →Available to newly incorporated PT PMA from 2026 onwards
- →Available to CV, Firma, and BUMDes incorporated after 22 April 2026
- →Any new entrant seeking to use the scheme as a tax planning tool
- →Existing PT PMAs already using the 0.5% scheme continue for the remainder of their 3-year window under PP 55/2022
- →Individual taxpayers (orang pribadi) with revenue under IDR 4.8 billion
- →Perseroan Perorangan — for up to 4 tax years
- →Cooperatives (koperasi) — for up to 4 tax years
Important for existing PT PMA owners: PP 20/2026 closes the door for new entrants only. It does not pull the rug out from under businesses already inside the scheme. If your PT PMA entered the Final Tax scheme before 22 April 2026, you continue to benefit from it for the remainder of your 3-year window — completely unaffected. The change is entirely forward-looking.
Who Still Qualifies for 0.5%
The Three Categories That Retain Access
Going forward, the 0.5% Final Tax rate applies exclusively to three categories of taxpayer. As a foreign investor operating through a PT PMA, none of these apply to your situation.
Category 01
Individual Taxpayers
Orang pribadi with annual gross revenue under IDR 4.8 billion. This covers Indonesian individuals running small businesses — not foreign-owned corporate structures.
Category 02
Perseroan Perorangan
An individual company established by one Indonesian individual under the Cipta Kerja Law. Eligible for up to 4 tax years. Not available to foreign shareholders.
Category 03
Cooperatives (Koperasi)
Indonesian cooperatives remain eligible for the 0.5% scheme for up to 4 tax years. This category is entirely separate from foreign-owned company structures.
What Applies Now
What Tax Rate Does a New PT PMA Pay From 2026?
If you set up a PT PMA in 2026 or later, your company pays Corporate Income Tax (PPh Badan) under the standard Indonesian CIT framework from day one. The base rate is 22%, applied to net taxable profit — not gross revenue. Therefore, under the standard system, you pay tax on what remains after legitimate business expenses: salaries, rent, professional fees, equipment, marketing costs, and so on. For companies with meaningful operating costs, the effective tax burden is often considerably lower than the 22% headline rate suggests.
In addition, there is a significant relief provision available to smaller PT PMAs. Under Article 31E of Indonesia's Income Tax Law, companies with annual gross revenue below IDR 50 billion may qualify for a 50% reduction on the applicable tax rate for a portion of their taxable income. In practice, this brings the effective rate down to 11% on taxable income attributable to the first IDR 4.8 billion of revenue.
22%
Standard CIT Rate
Applied to net taxable profit — not gross revenue. Legitimate business expenses reduce your taxable base: salaries, rent, professional fees, depreciation, and marketing costs all count as deductions. For most operating PT PMAs, the effective rate sits well below 22%.
11%
Article 31E Effective Rate
Available to companies with annual gross revenue below IDR 50 billion. Provides a 50% discount on the CIT rate for taxable income attributable to the first IDR 4.8 billion of revenue. However, to access this relief, your company must maintain proper bookkeeping.
Think of proper bookkeeping as an asset, not just an obligation. Staff, rent, professional services, and depreciation — expenses that were irrelevant under a gross revenue flat tax — become meaningful deductions under the standard CIT system. A well-structured PT PMA with good records will often pay considerably less than the 22% headline rate implies. Moreover, Article 31E relief is only accessible if your revenue, costs, and net profit are clearly documented and accurately reported.
Context
Why Did Indonesia Make This Change?
The 0.5% UMKM Final Tax was originally designed as a breathing space for genuine micro and small businesses — new entrepreneurs who needed simplicity while they found their footing, not sophisticated corporate structures with foreign shareholders. Over time, however, the scheme attracted a wider range of entities that used it as a deliberate tax planning tool rather than a temporary support mechanism.
PP 20/2026 refocuses the incentive on the businesses it was designed to serve. As a result, the government ensures that PT and PT PMA entities operate within a proper bookkeeping and profit-based tax framework from the outset.
The bigger picture: Seen in that context, the change forms part of a broader pattern of Indonesia maturing alongside a growing economy — increasingly aligning with international standards for corporate governance and tax transparency. For long-term foreign investors, that trajectory is a positive signal. The removal of the 0.5% option does not change the fundamental case for investing in Indonesia. The country recorded IDR 498.8 trillion in investment realisation in Q1 2026 alone — a 7.2% year-on-year increase — and the overall environment for foreign direct investment remains strongly positive.
Practical Guidance
What This Means If You're Planning to Set Up a PT PMA in 2026
Understanding PT PMA tax in Indonesia for 2026 means building your financial model around the standard CIT system from the start. Here is what that looks like in practice:
1
Model on standard CIT from day one
Factor in 22% on net taxable profit, or 11% on taxable income attributable to the first IDR 4.8 billion of revenue if you qualify for Article 31E relief. Build this into your investment model before you incorporate.
2
Budget for bookkeeping and tax compliance from the start
Monthly bookkeeping, an annual tax return (SPT Tahunan Badan), and potentially monthly withholding tax filings are all part of your compliance obligations. These are manageable costs, but they need to be accounted for from day one — not treated as an afterthought.
3
Use your expenses as deductions
Unlike the old 0.5% flat tax on gross revenue, the standard CIT system rewards proper bookkeeping. Salaries, rent, professional fees, and depreciation all reduce your taxable base. Therefore, a well-structured PT PMA with good records will typically pay far less than the 22% headline rate.
4
Register correctly in Coretax from the outset
Indonesia's mandatory Coretax system has been the primary interface for all corporate tax filings, payments, and reporting since 2025. Ensure your company registers in Coretax with the correct active tax obligations from the start — CIT, any applicable withholding taxes, and VAT if you expect to register as a PKP (taxable entrepreneur). Tax obligations in Indonesia begin from the moment your company is legally registered, even before you generate revenue. Missing early filing deadlines — even for nil returns — results in entirely avoidable penalties.
Summary
The Bottom Line on PT PMA Tax in Indonesia for 2026
PP 20/2026 is a clear and logical change: the 0.5% Final Tax scheme was built for micro businesses, and Indonesia has decided that PT PMA companies should operate within the standard corporate tax framework from the start. For existing PT PMA owners already using the scheme, nothing changes mid-stream — your 3-year window runs its course as planned.
For anyone setting up a new PT PMA from 2026 onwards, the message is straightforward: model your business on the standard CIT system, invest in proper bookkeeping early, and take advantage of Article 31E relief if your revenue qualifies. With the right structure and the right advisors in place, the transition is very manageable — and in many cases, fairer.
Already incorporated before 22 April 2026 and using the 0.5% scheme? You are fully protected. Your entitlement runs to the end of your 3-year window under PP 55/2022, and PP 20/2026 does not affect you mid-stream. However, when your window closes, you transition to the standard CIT framework — so it is worth starting your bookkeeping setup now rather than waiting.
This article is prepared for informational purposes and represents SAS expert analysis. It does not constitute formal legal or tax advice. Laws and regulations are subject to change. Please consult a qualified Indonesian tax professional or contact the SAS team for guidance specific to your situation.
