Three figures, three different calculations
| Figure | Tax base | When it matters |
|---|---|---|
| 0.5% | Gross turnover | A simplified final-tax regime for eligible small taxpayers. PP 20/2026 narrowed the categories that can enter it. |
| 11% | A qualifying portion of taxable profit | Article 31E halves the standard 22% corporate rate only for the portion of taxable profit attributable to the first IDR 4.8 billion of turnover. |
| 22% | Taxable profit | The standard corporate income-tax rate. |
The 11% figure is not automatically applied to all profit whenever turnover is below IDR 50 billion. That shortcut is the main source of confusion.
How Article 31E works
Article 31E is available to qualifying domestic companies with annual turnover of no more than IDR 50 billion. The reduction applies only to the fraction of taxable profit corresponding to the first IDR 4.8 billion of turnover.
Consider a company with:
- annual turnover of IDR 10 billion;
- taxable profit of IDR 2 billion;
- no other adjustment affecting this illustration.
The calculation is:
- Portion of taxable profit eligible for the reduced rate: IDR 2 billion × IDR 4.8 billion ÷ IDR 10 billion = IDR 960 million.
- Tax on that portion: IDR 960 million × 11% = IDR 105.6 million.
- Remaining taxable profit: IDR 1.04 billion.
- Tax on the remainder: IDR 1.04 billion × 22% = IDR 228.8 million.
- Total corporate income tax: IDR 334.4 million.
In this example, tax equals 16.72% of taxable profit. A company at or below IDR 4.8 billion of turnover may obtain the 11% rate across its qualifying taxable profit. Between IDR 4.8 billion and IDR 50 billion, the effective rate moves between 11% and 22%. Above IDR 50 billion, the Article 31E reduction is unavailable.
The Directorate General of Taxes provides the underlying method in its corporate income-tax calculation guidance.
What PP 20/2026 changed
Government Regulation 20/2026 took effect on 22 April 2026 and amended the simplified final-tax rules. It restricts new access to the 0.5% regime to the taxpayer categories named in the regulation, including individuals, qualifying single-shareholder companies and cooperatives. An ordinary multi-shareholder PT or PT PMA cannot newly enter that regime after the effective date.
The transition matters. An entity that was already using the 0.5% regime validly may continue only until the end of its documented time limit. Its eligibility, start date and remaining period should be confirmed from the tax file rather than inferred from the company type alone. The Directorate General of Taxes describes that transition in its official explanation of PP 20/2026.
A practical review for a villa company
Before comparing rates, collect four items:
- the legal form of the taxpayer;
- annual turnover;
- taxable profit based on proper accounts;
- evidence of any existing 0.5% facility and its expiry date.
For a PT PMA, the usual starting point is the corporate system: 22% on taxable profit, with the Article 31E reduction applied where its conditions are met. This is separate from the treatment of accommodation under central VAT and local tax. The relevant regency determines the local tax rate and procedure for the operation.
Common questions
Did PP 20/2026 increase the corporate rate to 22%? No. The standard 22% corporate rate already existed. PP 20/2026 changed eligibility for the simplified 0.5% regime.
Does a company below IDR 50 billion turnover pay 11% on all profit? Not necessarily. Article 31E applies the reduced rate to a calculated portion of taxable profit. The example above shows the split.
Can an ordinary PT or PT PMA start using the 0.5% regime now? Not after 22 April 2026 under the new eligibility rules. A pre-existing valid user may have a limited transition period, which must be checked in its records.
Does this tell me the final tax bill for my villa company? No. Deductibility, related-party charges, withholding taxes, losses, tax credits, local tax and the company's accounting records can all change the result.
Last reviewed: 17 July 2026.
Related: How money can leave a PT PMA · Who operates the villa and who pays the tax?
Sources: Government Regulation 20/2026; Directorate General of Taxes explanation; Directorate General of Taxes corporate calculation guidance. Sources checked 17 July 2026.
This article is general information, based on our reading of the sources available on the review date. It may be incomplete, outdated or mistaken and is not tax, legal or accounting advice. Confirm the applicable Indonesian text, the taxpayer's records and the calculation with a licensed Indonesian tax professional before filing or structuring a transaction.