What people are repeating on social media
"Villa companies now pay 22 percent instead of 0.5 percent." "PT PMA can no longer operate legally under the old tax rules." "Bali just tripled taxes on foreign investors." None of these are accurate. They compress a narrow eligibility change into a rate change that never happened.
Three numbers keep appearing together in the same confused sentence: 0.5 percent, 11 percent, 22 percent. Read as a sequence, they sound like escalating tax brackets, or a rate that tripled this year. They are not that. They are three separate, long-standing tax treatments that a company can sit under depending on its structure and size. PP 20/2026 did not invent any of them. What it did was narrow who is allowed to use the simplest one.
The three numbers, separated
| Rate | What it actually is |
|---|---|
| 0.5% | PPh Final UMKM: a simplified flat tax on gross turnover, no profit calculation required. Designed for small businesses. |
| ~11% | The effective corporate rate under Article 31E: a 50 percent discount on the standard rate, for companies with annual turnover under Rp50 billion that keep proper books. |
| 22% | The standard corporate income tax rate (PPh Badan) on net taxable profit. |
None of these three numbers is new. All three existed before PP 20/2026. What changed is eligibility for the first one.
What PP 20/2026 actually did
Issued 22 April 2026, amending PP 55/2022, the regulation narrowed who qualifies for the 0.5 percent final tax. Before this change, a PT, a CV, a firm, or a village-owned enterprise could all use the 0.5 percent flat rate as long as annual turnover stayed under Rp4.8 billion, regardless of how many shareholders the company had. After PP 20/2026, the 0.5 percent facility is reserved for individual taxpayers, a Perseroan Perorangan (a company with exactly one founding shareholder), and cooperatives. A standard multi-shareholder PT, including the PT PMA structure most foreign-owned villa companies use, is no longer eligible for new filings under 0.5 percent and moves to the standard corporate tax system, though existing users get a transition period until their original facility window expires.
The tax authority's own words
The Directorate General of Taxes addressed the confusion directly. Its own public statement reads, in translation: there is no new income tax rate in Peraturan Pemerintah 20/2026. The change is about who may use the 0.5 percent regime, not about a new rate replacing it.
Why the change exists
The 0.5 percent facility was built for genuinely small, simple businesses. In practice, it also became a way to stay small on paper. A company approaching the Rp4.8 billion turnover ceiling could split into a second entity, keep each one under the threshold, and continue filing the simplest possible tax return indefinitely instead of graduating into the standard system with real bookkeeping. The revision closes that specific door for multi-shareholder companies. It does not raise anyone's rate. It removes an eligibility category that was being used past its intended purpose. It also adds real anti-abuse logic: turnover is now measured across a household where relevant, aggregating a husband, wife and any single-shareholder companies they each control, specifically to stop the same income being split across entities to keep re-qualifying.
The change is also not an overnight cutoff. Entities already using the 0.5 percent regime under the old PP 55/2022 window, including CV, firm, standard PT and BUMDes structures, keep that treatment until their original time-limited window runs out. Nobody loses the regime mid-year by surprise.
If your PT PMA villa company was never filing under the 0.5 percent regime in the first place, this change does not affect your tax bill at all. It affects who else was allowed to.
What this means in practice for a villa PT PMA
A PT PMA pays corporate income tax at 22 percent on net taxable profit, reduced to the effective roughly 11 percent rate on the portion of profit covered by the Article 31E discount, when annual turnover stays under Rp50 billion and proper books are kept. This was already the standard treatment for a normal multi-shareholder company before PP 20/2026, and remains the standard treatment after it. This is a separate question from VAT: hospitality revenue itself is generally excluded from central VAT in favor of local PBJT hospitality tax, a point we cover in full in our note on legally renting a villa short-term. None of this moved either.
The honest summary
Nothing about the tax burden on a properly structured PT PMA villa business changed this year. What changed is that a narrower group of entities can now use the simplest possible filing method, closing a gap that was mostly used by structures set up specifically to keep exploiting it.
Structuring, licensing and tax rhythm are handled early on the mandates we carry, in coordination with independent tax and legal partners, not left for someone to untangle after the fact.
Talk to FrançoisQuestions we get asked directly
Did Bali villa tax change to 22 percent? No. The 22 percent standard corporate rate already existed before PP 20/2026, and most PT PMA companies were already subject to it or to the roughly 11 percent effective rate under Article 31E, not to the 0.5 percent facility.
Can a PT PMA use the 0.5 percent final tax? No, and this was already the practical reality for most standard multi-shareholder PT companies before PP 20/2026. The regulation formally closes a narrower loophole: CV, firm, and other multi-shareholder entities that were using 0.5 percent past its intended purpose.
Does this affect my existing villa company? Only if it was actively filing under the 0.5 percent regime as a PT, CV or similar entity. If you were already on the standard corporate system, nothing changes.
last reviewed: july 2026
Related: What PP 28/2025 means for villa owners · Run the numbers on your own project
Sources: Direktorat Jenderal Pajak (pajak.go.id), official guidance on PP 20/2026; Peraturan Pemerintah 20/2026, amending PP 55/2022 on PPh Final UMKM, effective 22 April 2026; Article 31E, Income Tax Law (UU PPh), on the reduced-rate facility for turnover under Rp50 billion; DJP public statement confirming no new income tax rate was created by PP 20/2026, checked 7 July 2026. This note explains the regulatory framework as we understand it and is not tax advice. Your company's actual eligibility and rate depend on its specific structure, registration date and bookkeeping status. Confirm with a licensed Indonesian tax consultant before making any filing decision based on this note.