Want to Open a PT PMA? How Tax Rules Have Changed

If you’ve been considering opening a business in Bali as a foreigner, a new law could impact your plans and budget. Previously, one of the biggest financial advantages of starting a company here was the 0.5% corporate sales tax for the first few years. However, new rules introduced in April 2026 have changed that.

Bali continues to attract a growing number of foreign entrepreneurs and investors who are looking to build or expand their businesses in Indonesia.

The new law mostly applies to small companies in Indonesia, both those owned by foreigners and locals alike. These smaller businesses are often known as MSMEs (Micro, Small and Medium Enterprises) and the 0.5% rate was originally created as a simple way to encourage growth when they were first starting out. Although this rate still is valid for some taxpayers, foreign-owned businesses are no longer one of them. 

For our readers who are short on time: 

As of April 22, 2026, new foreign-owned companies (PT PMAs) in Bali are no longer eligible for Indonesia's 0.5% corporate income tax rate on gross turnover. That rate now only applies to Indonesian individuals, sole proprietorships and cooperatives. Instead, a new PMA is taxed the standard way, which works out to an effective 11% on net profit if your revenue is under IDR 4.8 billion, a mixed pro rata 11%/22% rate between IDR 4.8 billion and IDR 50 billion, and 22% for any figure above that. If your company was already using the 0.5% rate before the new rule, then nothing changes for you. You keep it for three years from your original eligibility date, as long as your turnover stays under IDR 4.8 billion.

The New Rule 

On the 22nd of April 2026, the Indonesian government issued Government Regulation No. 20 of 2026, which updates an earlier rule from 2022, so that the 0.5% tax rate now only applies to Indonesian individuals, sole proprietorships and cooperatives.

Recent regulatory updates in 2026 have changed how MSME tax incentives apply to foreign-owned companies.

This means that standard corporations do not qualify. Because a PT PMA (foreign-owned company) is structured as a regular limited liability company, newly established PMAs no longer have access to the 0.5% tax option.

This move wasn't aimed at foreigners, but instead was done as a way of improving Indonesia's business tax rules, to keep the low rate focused for those who need it and to close loopholes that some were using to pay less than they should. Foreign-owned companies have happened to get caught up in it because they are structured as standard corporations - an entity class that has been removed from the scheme entirely. Ultimately, these regulatory adjustments aim to curb tax evasion, eliminate systemic loopholes, and improve overall fiscal transparency.

So What Will You Actually Pay?

Now that the 0.5% tax option for companies with an annual gross turnover under IDR 4.8 billion is off the table, newly established PMAs will be taxed under the standard corporate income tax regime. What you pay depends on how much your business brings in over the year:

• If your revenue is under IDR 4.8 billion, you'll pay an effective rate of around 11% on your net profit.

• If your revenue lands between IDR 4.8 billion and IDR 50 billion, the rate is a mixed pro rata calculation of 11% and 22% of your net profit.

• If your revenue is above IDR 50 billion, you'll pay the standard 22% rate on net profit.

New Rules: 

Overview of Indonesia’s updated corporate tax system for PT PMA companies based on revenue and profit structure.

There is also a shift in the way your tax is calculated. Previously, 0.5% was charged on your turnover (total sales), whether or not you made any money. The new rates are charged on your profit (what's left after costs). This means that if you have a lot of outgoings or thin margins, paying tax on your profit might actually work out better for you. However, if you have a very profitable business, it might cost more. Therefore, it’s a good idea to check your numbers before deciding whether the new rule is bad or good news. 

What If My Company Already Exists?

If your company was already using the 0.5% tax rate before this new rule, then you don’t have to change anything. For your business, the tax rate stays the same as it was and you keep it for the remaining time you were entitled to, usually up to three years, as long as your turnover is under the threshold of 4.8 billion IDR. This rule only applies to newcomers and does not affect you. 

Need Help? 

Professional guidance can help foreign investors navigate Indonesia’s evolving business and tax regulations more effectively.

This rule might be bad or good depending on who’s looking at it. If you’re not sure what it means for your business plans, then it’s worth speaking to a qualified professional who can guide you. We are Bali Solve, a business consulting and visa agency that helps hundreds of businesses in Canggu and Pererenan conduct their business more efficiently. We have a team of experts who can advise you on taxes, legal affairs, accounting, company setup and more. Simply reach out to us and let us help you to understand the best path forward for your new business in Bali. 

Frequently Asked Questions

Q: I'm setting up a new PT PMA. Can I still get the 0.5% tax rate?
A:Unfortunately, you can’t. Since the 22nd of April 2026, new foreign-owned companies no longer qualify for it. The 0.5% rate is now only for Indonesian individuals, sole proprietorships and cooperatives, and because a PMA is a regular limited company, it falls outside that list. 

Q: Company already uses the 0.5% rate. Do I lose it now?
A:No, you don't. If you were already using the rate before the new rule came in, then you keep it for the time you were already entitled to, up to your third tax year, as long as your turnover stays under IDR 4.8 billion. The change only applies to newly set-up companies.

Q: Was this change aimed at foreigners?
A: No, it wasn't. It's a broader update to Indonesia's small-business tax rules, meant to keep the low rate focused on those who need it and to close loopholes that some were using to pay less than they should. Foreign-owned companies just happened to get caught up in it, because they're regular companies, and regular companies as a whole were moved out of the scheme.

Q: Is losing the 0.5% rate bad news for my business?
A:Not necessarily. The old rate was charged on your turnover (total sales), while the new rates are charged on your profit (what's left after costs). So if your business has thin margins or high expenses, paying on profit might actually work out better for you. If it's very profitable, it could cost more. It's a good idea to check your own numbers before deciding either way.

Q: What will I pay instead?
A:It depends on how much your business brings in over the year. Roughly 11% on net profit if you're under IDR 4.8 billion, a mixed 11%/22% rate between IDR 4.8 billion and IDR 50 billion, and the standard 22% on net profit if you're above IDR 50 billion.

Q: How do I know what's right for my situation?
A: These things are much easier to sort out at the start than to fix later. If you're not sure where you stand, the team at Bali Solve can help you work out which rate applies and what it means for your plans. Just reach out via WhatsApp or drop by the office in Pererenan, near Canggu.


Written by Bali Solve Team
24th June 2026