UMKM Final Income Tax

Indonesia's simplified final income tax on gross revenue for small businesses, and when it ends.

Also known as: UMKM tax, final income tax, PPh Final UMKM

Indonesia offers small businesses (UMKM) a simplified final income tax: a low single rate applied to gross revenue (turnover), replacing the standard corporate income computation while eligible. No profit calculation, no deductible-expense tracking for the tax itself — revenue in, fixed percentage out. Simplicity is the whole point.

eligible + elect → pay fixed % of gross revenue → done (no corporate profit computation)
until:  time limit expires or scale exceeded → graduate to standard regime

Eligibility is bounded — by time (a fixed number of years, differing for individuals vs entities) and by scale. Track both clocks from day one: the regime ends whether you are ready or not, and the standard regime demands real books, which take quarters to build if started late.

The classic mistakes:

Assuming it lasts forever. The time limit surprises founders mid-growth. Calendar the expiry at election and prepare books a year early.
No bookkeeping “because tax is simple”. The tax is simple; running the business blind is not. Lenders, investors and partners all want real financials (bookkeeping) regardless of tax regime.
Outgrowing silently. Crossing scale thresholds without noticing creates retroactive exposure. Monitor turnover against the limits continuously.
Choosing it without modeling. For low-margin businesses, a turnover tax can exceed standard-regime liability. Run both computations with your accountant before electing — simple is not always cheaper.

Rates, thresholds and durations change by regulation — confirm current figures with your accountant; this page describes the mechanism. See startup taxes for the wider picture.