Government Plans 0.5 Percent Final Tax for SMEs No Time Limit

Jakarta, 31 October 2025 – The Indonesian government plans to introduce a final income tax (PPh) rate of 0.5 percent for individual and sole‑proprietor SMEs with no time limit. The proposal was announced by Secretary of the Coordinating Ministry for Economic Affairs, Susiwijono Moegiarso, in a text message on Friday.

The rate will be codified through a revision of Government Regulation (PP) No. 55 of 2022, which previously limited the final‑tax scheme to seven years for individuals and four years for cooperatives and other entities. A separate provision is being prepared to extend the 0.5 percent relief for cooperative SMEs until the 2029 tax year.

Removing the time restriction and extending the benefit to 2029 is expected to lower tax burdens for SMEs, improve cash flow, and aid the national economic recovery. The detailed technical regulation has not yet been issued.