Indonesia Plans to Remove Time Limit on 0.5% Final Income Tax

Tax Relief for Individual and Single-Person Corporations

The Indonesian government is set to remove the time limit for the 0.5% final income tax rate applicable to certain categories of taxpayers. Director General of Taxes, Bimo Wijayanto, revealed this during a meeting with Commission XI of the DPR on November 17, 2025. The change will be formalized through a revision of Government Regulation (PP) Number 55 of 2022, which currently governs the adjusted income tax regulations.

Key Changes in the Revised Regulation

The revision specifically targets Article 59 of PP 55/2022, which previously imposed a time limit on the application of the 0.5% final income tax rate for individual taxpayers and single-person corporations (PT Perorangan). Under the new regulation, eligible taxpayers will be able to benefit from this reduced tax rate indefinitely, providing significant relief and simplification for compliant taxpayers.

Rationale and Impact

The decision to remove the time limit is expected to encourage compliance and provide a more stable tax environment for small businesses and individual entrepreneurs. By making the 0.5% final income tax rate permanent for eligible taxpayers, the government aims to stimulate economic growth and reduce the administrative burden associated with transitioning between different tax schemes.

Implementation Status

The revision is currently in the final stages of preparation. Once implemented, it will represent a significant shift in Indonesia's tax policy, aligning with efforts to improve the ease of doing business and attract investment.