PPh Final in Indonesia: The 0.5% Tax for Small Businesses
PPh final is Indonesia’s 0.5% tax on small businesses’ gross turnover: who can use it, the IDR 500 million tax-free part for individuals, and how it is paid.
References (6)
- Income Tax Law, UU No. 7 Tahun 1983 as amended by UU No. 7 Tahun 2021. Article 4(2)(e) allows a final tax on the business income of a taxpayer with a certain gross turnover. Article 7(2a) leaves the first IDR 500 million of an individual's turnover each year untaxed.
- PP No. 55 Tahun 2022, in force 20 December 2022. Article 72(c) revokes PP No. 23 Tahun 2018. Articles 60 to 63, not amended, set the monthly base, the IDR 500 million, a limit passed during the year, payment and the certificate. Article 59(1) and (2), as enacted, set the periods an existing CV or PT keeps.
- PP No. 20 Tahun 2026, set, promulgated and in force on 22 April 2026, amending PP No. 55 Tahun 2022. Article 56 sets the 0.5% rate and excludes professional income. Article 57 sets who may use it, the exclusions and the one-way choice of the ordinary rates. Article 58 sets how the IDR 4.8 billion is measured. Article 59 is deleted. Article II sets the transition, and the elucidation gives worked examples.
- PMK No. 164 Tahun 2023, in force 29 December 2023. Article 5 covers the notice to use the ordinary rates. Articles 6 to 9 cover the calculation, monthly payment, withholding by a buyer and the annual return. Articles 11 to 13 cover the certificate. Article 16 covers instalments after leaving the regime.
- PMK No. 81 Tahun 2024. Article 94(2)(a) sets payment by the 15th of the following month. Article 171(4) treats a validated payment as the monthly report. Article 121(e) covers a refund of final tax that was not owed.
- PMK No. 37 Tahun 2025, Article 8(4), on collection by marketplaces as part-payment of a seller's final tax.
PPh final is the tax a small business in Indonesia can pay as a flat 0.5% of its gross turnover, in place of income tax on its profit, and an individual pays nothing on the first IDR 500 million of turnover each year. PPh stands for Pajak Penghasilan, income tax. It is open to individuals, one-person companies and cooperatives with turnover up to IDR 4.8 billion a year (Government Regulation, or PP, 55/2022, as amended by PP 20/2026).
Who can use the 0.5% rate
Three kinds of resident taxpayer can start using it: an individual, a PT Perorangan, which is a limited company founded by one person, and a cooperative (PP 55/2022, Article 57, as amended). PP 20/2026 removed the time limit for individuals and PT Perorangan.
| Can start | How long | |
|---|---|---|
| Individual | Yes | No time limit |
| PT Perorangan | Yes | No time limit |
| Cooperative | Yes | Four tax years from registration |
| CV or firm | No | Only until its running period ends |
| Ordinary PT | No | Only to the end of a period it already has |
A CV (persekutuan komanditer, a limited partnership), a firm or an ordinary PT (perseroan terbatas, a limited liability company) cannot start using it. That includes a PT PMA (penanaman modal asing), a foreign investment company.
One already inside its period under the earlier rules keeps the rate until that period ends, while it still meets those rules (PP 20/2026, Article II). For a CV registered after 20 December 2022, the period counts from the tax year of registration and is four tax years (PP 55/2022, original Article 59(1)(b) and 59(2)(a), kept by PP 20/2026, Article II(1)(e)). A CV registered in 2025 therefore keeps it to the end of 2028.
A PT Perorangan that supplies its founder’s professional services cannot use the rate, and nor can a permanent establishment (Article 57(2)(b) and (d), as amended). PP 23/2018, the earlier regulation, was revoked from 20 December 2022 (PP 55/2022, Articles 72(c) and 74).
What turnover the rate covers
The tax is charged on each month’s gross turnover, before discounts. An individual’s income from professional work is outside the rate (PP 55/2022, Article 56(3)(a) and (4), as amended). That covers, among others, lawyers, accountants and consultants, doctors, performers, and online content creators such as influencers and vloggers.
Income that already has its own final tax, such as construction services, rent from land or buildings, and the sale of land or buildings (PP 9/2022; PP 34/2017; PP 34/2016), is outside the 0.5%. It still counts towards the IDR 4.8 billion limit (PP 55/2022, Article 56(3)(c); elucidation to Article 58).
The IDR 4.8 billion limit
VAT (value added tax) registration is a separate test; see our guide to VAT registration.
Working out PPh final
An individual with turnover of IDR 1,200,000,000 in a year pays nothing on the first IDR 500 million and 0.5% on the rest.
| Description | IDR |
|---|---|
| Gross turnover for the year | 1,200,000,000 |
| Tax-free part | (500,000,000) |
| Turnover taxed | 700,000,000 |
| Tax for the year 0.5% × 700,000,000 | 3,500,000 |
A PT Perorangan with the same turnover pays IDR 6,000,000, because a company has no tax-free part. The individual’s IDR 500 million is counted cumulatively from the first month of the tax year.
Choosing the ordinary rates instead
PPh final is charged on turnover whatever the profit, while the ordinary rates tax only profit (PP 55/2022, Article 60(1); Income Tax Law, Article 17). For an individual, the two compare like this.
| The 0.5% tax | Five bands | |
|---|---|---|
| Charged on | Gross business turnover | Taxable income after the tax-free allowance |
| Rate | 0.5%, final | 5% to 35% |
| Tax-free part | The first IDR 500 million of turnover each year | The tax-free allowance |
To switch, you give notice to the Directorate General of Taxes (Direktorat Jenderal Pajak, the DJP) by the end of the tax year, and the ordinary rates apply from the next year. A newly registered taxpayer can choose them at registration. There is no way back to the 0.5% afterwards (PMK 164/2023, Article 5; PP 55/2022, Article 57, as amended).
When the rate ends
By choice
Your own decision, by the notice described above.
Over the limit
Turnover above IDR 4.8 billion in one year ends the rate from the year after.
End of a period
A cooperative reaches its set number of years, or a CV or ordinary PT reaches the end of the period it kept.
In the first year on the ordinary rules, monthly income tax instalments (PPh 25) begin, worked out as for a new taxpayer (PMK 164/2023, Article 16).
Paying and reporting PPh final
You pay PPh final yourself each month, by the 15th of the following month (PMK 164/2023, Article 7(2); PMK 81/2024, Article 94(2)(a)). The date sits with the other monthly taxes on our compliance calendar.
A validated payment counts as the monthly return. No return is needed in a month with nothing to pay, such as while an individual’s turnover for the year is still inside the tax-free part (PMK 164/2023, Article 7).
At the year end, the turnover and the tax paid are reported on an attachment to the annual income tax return (PMK 164/2023, Article 9(1)).
An individual who paid on turnover that fell inside the tax-free part can ask for that tax back (PMK 164/2023, Article 9(2)).
Give buyers a copy of your certificate
A buyer appointed to withhold tax deducts the 0.5% from a seller who has a certificate (Surat Keterangan) showing it is on this regime and who hands over a copy (PMK 164/2023, Article 8(1)). The DJP issues the certificate on an application that meets the conditions (PMK 164/2023, Articles 11 and 12).
If you would rather not track it, our personal tax team advises on the 0.5% and files it for an individual, and our corporate tax team handles it for a company still able to use it.
Since October 2026 (DJP press release SP-23/2026), appointed online marketplaces collect 0.5% of the invoice value of a seller’s sales, excluding VAT. For a seller on this tax it counts as part-payment of it (PMK 37/2025, Article 8(1) and (4)); PPh 22 collection covers how that works.
What this means for you
Whether the 0.5% suits you depends on your margins; we can look at your turnover and costs and advise whether to stay on it.