Final Income Tax Adjustments and Transitional Rules: PP 20/2026

The Indonesian government has amended its rules on final income tax through Peraturan Pemerintah Nomor 20 Tahun 2026 (Perubahan atas Peraturan Pemerintah Nomor 55 Tahun 2022 tentang Penyesuaian Pengaturan di Bidang Pajak Penghasilan — Amendment to Government Regulation 55 of 2022 on Adjustments in the Field of Income Tax). Enacted in Jakarta on 22 April 2026 and recorded in State Gazette 2026 No. 43, the regulation revises how gross turnover is measured for taxpayers under the final income tax scheme and sets out how the earlier regime's time limits carry into the 2025 and 2026 tax years.

Issue

Government Regulation 55 of 2022 established a final income tax (Pajak Penghasilan bersifat final) treatment tied to a taxpayer's gross turnover (peredaran bruto) over a defined period. As those fixed periods began to expire, questions arose over how turnover should be calculated for particular taxpayers and how taxpayers already inside the scheme should be treated once their term ended. PP 20/2026 responds by amending the turnover-measurement rule and adding transitional provisions.

Key Provisions

Pasal 58 restates how gross turnover under Pasal 57 paragraph (1) is determined. It covers the total gross turnover from business and from services connected with independent work in one year, taken from the last tax year before the year concerned, whether subject to non-final or final income tax, including turnover received or earned abroad, together with compensation in money or money-equivalent from such business and services before sales, cash, or similar discounts. For married individual taxpayers who hold a written agreement on the separation of assets and income, or where the wife elects to exercise tax rights and obligations separately under Pasal 8 paragraph (2) of the Income Tax Law, gross turnover is set by combining the turnover of husband and wife, including any sole-proprietor company (perseroan perorangan) they establish, as stated in Pasal 58 paragraph (3) referring to Pasal 57 paragraph (2). Pasal 59 is deleted.

The transitional provisions in Pasal II carry the final tax treatment forward. An individual taxpayer whose defined final-tax period ended in tax year 2024 may be subject to final income tax under this regulation for tax years 2025 and 2026; where the period ended in tax year 2025 for individuals and single-founder sole-proprietor companies, the treatment applies for tax year 2026, provided the taxpayer still meets the criteria set under Regulation 55 of 2022. A cooperative (koperasi) registered before this regulation took effect, whose period ended between tax years 2024 and 2029, may be subject to final income tax for tax years 2025 through 2029 on the same condition. Pasal 63 states that certificates confirming final income tax status (surat keterangan) remain valid for the corresponding periods until the taxpayer no longer meets the criteria. Business entities such as limited partnerships, firms, limited companies other than single-founder sole proprietorships, and village-owned enterprises whose defined periods had not yet ended may continue the final treatment until those periods expire.

Pasal II also confirms that all implementing rules issued under Regulation 55 of 2022 remain in force so far as they do not conflict with the new provisions. The elucidation addresses deductibility, stating that bribes, gratification, or other payments in any form to officials, civil servants, or state administrators, and to foreign public officials, run contrary to sound trade custom and to international anti-corruption provisions, and so are not costs to obtain, collect, or maintain income. It defines a foreign public official as any person appointed or elected to a legislative, executive, administrative, or judicial post of a foreign state, or performing a public function for one, including public bodies, public enterprises, and representatives of public international organisations.

Regulatory Context

The amendment chiefly affects individuals, sole-proprietor companies, and cooperatives that entered the final income tax scheme under Regulation 55 of 2022 and whose terms fall within the stated years, since it names the specific tax years for which final treatment continues. The turnover-aggregation rule for married taxpayers and their sole-proprietor companies sets out how the eligibility threshold is measured in those cases. It sits alongside other recent fiscal measures such as the Defense Ministry non-tax revenue tariffs and the governance rules for the Danantara sovereign investment body. PP 20/2026 took effect on the date of its promulgation, 22 April 2026.

Read the full regulation in the CRPG Law Database.

Methodology: This memo summarises the official regulation text and is not legal advice; report corrections to contact@crpg.info.

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