The 0.5% Final Income Tax Rate is Revoked Even Though Your Business Turnover is Small? Don't Worry! The Article 31E Facility of the Income Tax Law is Still Available

The Government has issued Government Regulation Number 20 of 2026 (PP 20/2026), promulgated on April 22, 2026, as an amendment to PP Number 55 of 2022 (PP 55/2022). Based on this new regulation, business entities in the form of Non-Individual Limited Liability Companies (PT), Limited Partnerships (CV), Firms, and Village-Owned Enterprises (BUMDes) can no longer utilize the 0.5% Final Income Tax rate.

However, this does not mean the Government intends to complicate the tax compliance of these entities. There is still relief available for certain business entities with modest incomes. The detailed provisions are as follows:

1. General Tax Rate Reduction (Article 31E Facility)

For Non-Individual PTs, CVs, Firms, and BUMDes established after PP 20/2026 took effect, or those whose transition periods have expired, the normal income tax rate applies. Nevertheless, based on Article 31E of the Income Tax Law (UU PPh), business entities with a gross turnover of up to Rp50 billion a year receive a facility: a 50% rate reduction applied to the Taxable Income (PKP) generated from the gross turnover portion up to Rp4.8 billion.

This means the Corporate Income Tax rate, which was previously 22%, becomes only 11%. However, these entities must maintain proper bookkeeping because this 11% rate is multiplied by the net profit (Taxable Income), not the gross turnover.

2. Technical Calculation Scheme

In practical implementation, the calculation of this facility is divided into two conditions based on total annual turnover:

3. Administrative Mechanism & Conclusion

Based on the Director General of Taxes Circular Letter No. SE-02/PJ/2015, the application of this facility uses a Self-Assessment system. Taxpayers do not need to submit an application or request a permit from the Tax Office (KPP). You simply need to attach the facility calculation details in Attachment 8 when filling out the Main Form of the Annual Corporate Income Tax Return.