Jakarta (ANTARA) – The Indonesian government has reassured the public that the 0.5 percent final income tax rate for micro, small, and medium enterprises (MSMEs) is now permanent, following amendments under Government Regulation No. 20 of 2026.MSMEs Minister Maman Abdurrahman stated that the policy was finalized to provide long-term certainty for business owners, marking a shift from when the incentive was only extended periodically.”The only difference now is that while extensions were previously limited to one year at a time, it is now open-ended for the coming years—meaning there is no time limit,” Abdurrahman said during a press conference in Jakarta on Wednesday.He emphasized that no changes or increases have been imposed on the baseline MSME tax rate.Micro-businesses with an annual turnover below Rp500 million (approximately US$27,800) will continue to enjoy a 0 percent tax rate. Meanwhile, those earning up to Rp4.8 billion (around US$267,000) remain subject to the 0.5 percent final tax rate.According to Abdurrahman, making the policy permanent follows directives from President Prabowo Subianto to give MSMEs stability and eliminate the threat of regulatory unpredictability.However, the government is introducing adjustments to ensure the incentives are properly targeted.Abdurrahman noted that evaluations over the past few years revealed instances of tax abuse by large enterprises, which were splitting into smaller business entities simply to qualify for the lower 0.5 percent final income tax bracket.To curb this, the 0.5 percent flat rate will now apply strictly to individual taxpayers, sole proprietorships, and cooperatives with an annual turnover under Rp4.8 billion. Corporate entities, such as limited liability companies (PT) and limited partnerships (CV), will instead be taxed based on their net profits.To cushion this transition, the government will still provide a 50 percent discount on the standard 22 percent corporate tax rate (resulting in an effective 11 percent rate) for corporate PTs and CVs with a turnover below the Rp4.8 billion threshold.The government is also implementing a transition period for corporate entities currently utilizing the 0.5 percent final income tax rate, while tightening enforcement to prevent future tax avoidance.