Business Splitting Weakens MSME Affirmative Policies and Tax Revenues
JAKARTA, DDTCNews - The Ministry of Micro, Small and Medium Enterprises (MSMEs) has highlighted the practice of split-offs frequently conducted by entrepreneurs to take advantage of the MSME final income tax scheme. This topic is among the reviews featured in national media today, Monday (15/6/2026).
Reghi Perdana, Assistant to the Minister of SMEs for Law and Public Policy Affairs, stated that the practice of split-offs reduces the effectiveness of the MSME final income tax scheme, which is essentially an affirmative policy.
"This practice reduces the effectiveness of the affirmative policies on MSMEs, whilst also potentially reducing state revenues that should be used to fund various people's economic empowerment programmes, such as MSME strengthening, job creation and poverty alleviation," he stated.
Through split-offs, large-scale businesses may continue to utilise the MSME final income tax at a rate of 0.5% because the turnover of each entity does not exceed IDR4.8 billion per year.
Referring to data from the Directorate General of Taxes (DGT), approximately 17.21%, or 93,260 out of a total of 542,000 MSME taxpayers, are indicated to have engaged in business splitting to take advantage of the MSME final income tax.
In further detail, 28,010 individuals are recorded as owning between 2 and 4 SMEs. Further, 1,877 individuals are recorded as owning between 5 and 25 SMEs.
The DGT also recorded 45 individuals owning between 26 and 50 SMEs. Lastly, 14 individuals are known to own more than 51 SMEs.
Since late last year, the Minister of Finance, Purbaya Yudhi Sadewa, had detected the practice of split-offs to take advantage of the MSME final income tax. Accordingly, the government incorporated provisions on anti-split-off for the MSME final income tax scheme in Government Regulation (Gov. Reg.) 20/2026.
With the entry into force of Gov. Reg. 20/2026, the utilisation of the SME final income tax scheme is restricted to individual taxpayers as well as corporate taxpayers in the form of sole proprietorships and cooperatives.
Individual taxpayers and sole proprietorship taxpayers may utilise the MSME final income tax indefinitely, insofar as the aggregate turnover of the individual and any sole proprietorship owned by that individual does not exceed IDR4.8 billion.
On the other hand, corporate taxpayers in the form of cooperatives may utilise the MSME final income tax for 4 tax years.
Other corporate taxpayers, such as limited liability companies (perseroan terbatas/PT) and limited partnerships (commanditaire vennootschappen/CV in Dutch), are encouraged to maintain proper bookkeeping and pay tax pursuant to the general provisions.
In addition to this topic, there is a review of Purbaya's pledge to optimise tax revenues. Further, the House of Representatives' request for the government to submit micro-taxation data also merits attention.
The following is a full review of the tax articles.
MSMEs May Use 0.5% Final Income Tax Indefinitely, Subject to Conditions
The Directorate General of Taxes (DGT) has affirmed that the SME final income tax scheme at a rate of 0.5% applies to individual taxpayers and sole proprietorships without a time limit.
Director of Tax Dissemination, Services and Public Relations of the DGT, Inge Diana Rismawanti, affirmed that individual taxpayers and sole proprietorships may use the MSME final income tax insofar as they fulfil the criteria, namely that their turnover does not exceed IDR4.8 billion in 1 tax year. The provisions on the utilisation of the MSME final income tax without a time limit are stipulated under Gov. Reg. 20/2026.
"For individuals and sole proprietorships, there is no time limit. They can now enjoy it indefinitely, insofar as they fulfil the criteria of the turnover of IDR4.8 billion per year," she said. (DDTCNews)
Purbaya Pledges to Boost Tax Revenues in 2027
Purbaya has committed to collecting higher tax revenues as well as customs and excise revenues in 2027, in line with an increase in the state revenue ratio target from the government's proposed 11.82%–12.4% of GDP to 12.01%–12.4% of GDP.
"[The reason the revenue target was increased] is because improvements are expected in the efficiency of tax and customs collection. The limit is still reasonable, as it is not far from the current level," said Purbaya.
Given the higher next year's state revenue projection, Purbaya stated that 2 strategic measures are to be undertaken, namely improving tax compliance and the tax basis. (DDTCNews)
Government Requested to Submit Micro-Taxation Data
Fauzi Amro, Deputy Chairperson of Commission XI of the House of Representatives, has requested the government to submit micro-taxation data based on the business sector classification in the financial note of the 2027 draft state budget (rancangan anggaran pendapatan dan belanja negara/RAPBN in Indonesian).
Moreover, the financial note must also include a mapping of tax revenues based on basis growth, performance growth and governance. "The Ministry of Finance shall submit micro-taxation data according to the business sector classification, along with a mapping of tax revenue growth based on the growth of the tax basis, performance and governance, to be submitted at the time of the financial note of the 2027 draft state budget," he said.
Further, the financial note of the 2027 draft state budget must also include the distribution, contribution and historical tax ratio of each business sector. (DDTCNews)
Indonesia Imposes Anti-Dumping Import Duty on Duplex Paperboards from 3 Countries
The government has imposed anti-dumping import duty (bea masuk antidumping/BMAD in Indonesian) on imports of duplex paperboard products originating from South Korea, Malaysia and Taiwan pursuant to Minister of Finance Regulation (MoF Reg.) 40/2026.
The anti-dumping import duty has been imposed because the findings of an investigation by the Indonesian Anti-Dumping Committee (Komite Antidumping Indonesia/KADI in Indonesian) have uncovered evidence of dumping, thereby resulting in an injury to the domestic industry.
The anti-dumping import duty is imposed on imports of duplex paperboard products classified under HS codes ex4810.32.90 and ex4810.92.90. The policy applies to 3 manufacturers/companies from South Korea, 2 manufacturers/companies from Malaysia and all companies from Taiwan at varying tariffs. (DDTCNews)
Local Governments Requested to Manage Civil Servants as Per Local Fiscal Capacity
The Ministry of State Apparatus Empowerment and Bureaucratic Reform (Pendayagunaan Aparatur Negara dan Reformasi Birokrasi/PAN-RB in Indonesian) has urged all local governments to manage civil servants in a planned manner and in alignment with local fiscal capacity.
Minister of State Apparatus Empowerment and Bureaucratic Reform, Rini Widyantini, stated that many regions currently face fiscal constraints in managing civil servants. Therefore, local governments need to have planned civil servant requirements that take into account local potential.
"Local governments may submit proposals for civil servant requirement planning that support the achievement of institutional objectives, taking into account competency needs, local potential and national priorities," she claimed. (DDTCNews) (dik)
