The MSME final tax remains at 0.5 percent until 2029 after the government confirmed an extension of the policy. This decision offers much-needed certainty and relief for small business owners across Indonesia, who form the backbone of the national economy.
MSME Final Tax Extended Until 2029
Coordinating Minister for Economic Affairs, Airlangga Hartarto, announced that the extension will apply to MSMEs with annual revenue up to IDR 4.8 billion. He emphasized the importance of long-term certainty rather than short-term adjustments.
“Regarding the final income tax for MSMEs with annual revenue of IDR 4.8 billion, the final tax rate of 0.5% will continue until 2029. So, we are not extending it year by year, but instead providing certainty until 2029,” Airlangga stated during a press briefing at the Presidential Secretariat.
The tax incentive not only lowers the financial burden on MSMEs but also simplifies administrative requirements, making compliance more straightforward for entrepreneurs.
Government Funding and Regulation Adjustments
To support the continuation of the incentive, the government allocated IDR 2 trillion for 2025. This funding ensures that MSMEs benefit from the reduced tax burden while contributing to economic growth.
According to data from the Ministry of Finance, more than 542,000 MSME taxpayers are already registered. With the extension in place, the government also plans to revise the relevant Government Regulation (PP) to reflect the new policy direction.
“The number of registered taxpayers has reached 542,000 according to the Ministry of Finance, and we will need to revise the Government Regulation,” Airlangga added.
This revision is expected to align regulations with the extended timeline, ensuring smooth implementation for both tax authorities and business owners.
Certainty for Indonesia Small Business Tax Policy
The extension of the 0.5 percent tax offers more than just a financial incentive. For many small businesses, certainty in tax policy is essential for planning and expansion. By confirming the rate until 2029, the government gives entrepreneurs confidence to invest, hire, and grow.
The simplified structure of the Indonesia small business tax also reduces time spent on compliance, allowing business owners to focus on productivity. This approach reflects the government’s recognition of MSMEs as the driving force behind Indonesia’s economy.
Moreover, ensuring continuity until 2029 helps foster stability, an important factor as businesses recover from global and domestic economic pressures.
MSME Tax Incentive Boosts Growth Potential
By extending the MSME tax incentive, the government signals strong support for entrepreneurship and innovation. The low rate encourages more businesses to operate formally, which increases transparency and broadens the tax base over time.
Entrepreneurs benefit from reduced costs and easier processes, which makes room for reinvestment and expansion. The incentive also levels the playing field for smaller enterprises competing in an increasingly digital and globalized marketplace.
In the long run, the continuation of the MSME tax incentive aligns with broader economic goals. It strengthens competitiveness, supports job creation, and empowers local businesses to thrive.
Low Tax Rate MSMEs Policy Ensures Stability
The decision to extend the 0.5 percent final tax until 2029 underscores the government’s commitment to stability and growth for MSMEs. By lowering tax burdens and simplifying compliance, the policy ensures that small businesses remain resilient contributors to Indonesia’s economy.
This long-term certainty allows entrepreneurs to plan ahead, expand operations, and seize new opportunities with confidence. With the government backing their role as economic drivers, MSMEs can look forward to a stable and supportive business environment through 2029.
Source: ekonomi.bisnis.com, beritasatu.com
Image: Getty Images
