DJP Warns UMKM Not to Split for 0.5% Final Tax Incentive

The Directorate General of Taxes (DGT) warned Indonesian micro, small and medium enterprises on 23 October 2025 not to split their businesses merely to obtain the 0.5 % final income‑tax incentive. The comment was made by Tax Director General Bimo Wijayanto at a press briefing at the Ministry of Coordinating Economic Affairs.

The 0.5 % incentive applies to UMKMs with annual turnover between IDR 500 million and IDR 4.8 billion. Enterprises exceeding that threshold are taxed on net profit in accordance with Article 17 of the Income‑Tax Law. The government has extended the incentive through 2029 with a budget allocation of IDR 2 trillion.

The warning underscores that the incentive is meant for businesses within the specified turnover range, not for those that have already grown and attempt to split to retain the rate. Continuation of the policy until 2029 aims to provide fiscal certainty and support UMKM cash flow. Monitoring of split‑business practices is expected to improve tax compliance.