The government mandates MSMEs to transition from the 0.5% Final Income Tax rate to the general tax rate once the facility's time limit expires or total annual turnover exceeds IDR 4.8 billion. Consequently, business entities are required to maintain statutory tax bookkeeping to systematically record revenue, expenses, and profit and loss. Corporate Taxpayers with a turnover below IDR 50 billion are eligible for a 50% tax rate reduction under Article 31E. Furthermore, these businesses are required to fulfill monthly Article 25 Income Tax installments. The Coretax administration system effectively streamlines this entire transition process through its integrated automation and validation features. .
Micro, Small, and Medium Enterprises (MSMEs) in Indonesia have long enjoyed tax simplicity through the 0.5% Final Income Tax (PPh Final) scheme regulated in Government Regulation Number 55 of 2022. However, this facility is time-bound. MSME Taxpayers must prepare to "grade up" and switch to using the general Income Tax (PPh) rate based on net profit.
This transition is often daunting due to fears of administrative complexity. However, with the implementation of the Coretax System in 2025, this process has become more integrated and automated. This article will discuss the procedures for switching schemes and provide in-depth case illustrations.
The use of the 0.5% Final Tax rate is temporary. Based on PP 55 of 2022, the validity periods are:
If this period expires, or if turnover exceeds IDR 4.8 billion, the Taxpayer is obliged to switch to the general rate starting the following tax year.
The absolute requirement for switching is maintaining Bookkeeping (Pembukuan). In Coretax, Corporate Taxpayers will default to the Accrual Basis method. Individuals must also switch from simple recording to structured bookkeeping.
Switching triggers the obligation for monthly tax installments. Coretax calculates this automatically in Attachment 6 based on your reported net income.
Profile: CV registered in 2020. Must switch to general rate in 2024. Turnover IDR 3 Billion, Expenses IDR 2.7 Billion, Taxable Income IDR 320 Million.
Analysis: While the amount is higher, it is fairer. If the business suffers a loss, the tax payable is Nil, unlike the Final Tax scheme which taxes turnover regardless of profit.
Transitioning to the General Rate is a strategic step towards transparency. The Article 31E facility provides significant relief. With Coretax, the complexity of bookkeeping and installments is simplified through prepopulated data and automated validation, ensuring a smooth "grade up" for your business.
References: Government Regulation Number 55 of 2022, Income Tax Law (UU HPP), and DGT Regulation PER-8/PJ/2025.
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