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Vietnam Cuts MSME Income Tax by 30%, What is the Position of Indonesia’s Tax Incentives?

September 8, 2026

Per the Warta Ekonomi article on August 24, 2026, the Vietnamese National Assembly passed, by a count of 480 to 1, a resolution to cut income tax by 30% in an extraordinary session. The cut applies to the 2026 and 2027 tax years for individuals, business households, and companies with a maximum annual income of VND10 billion (equivalent to approximately IDR6.76 billion). The move is part of a strategy to support the domestic economy while increasing the country’s attractiveness to investors.

At this threshold level, the policy is estimated to cover 99.86% of individuals and business households as well as more than 81.11% of companies in Vietnam. For taxpayers who have previously received other tax incentives under the Vietnam Corporate Income Tax Law, the 30% discount is calculated on the corporate income tax that is still payable after all applicable incentives are deducted.

MSME tax regulations in Indonesia

The income tax cuts in Vietnam bring up the question of how incentives for MSMEs in Indonesia compare. Indonesia already has regulations to provide tax relief for micro-, small-, and medium-sized enterprises (“MSMEs”). One of the main ones is a final income tax rate of 0.5% for taxpayers with a gross turnover of up to IDR4.8 billion in one tax year, originally issued under Government Regulation (“PP”) no. 55 of 2022 and recently amended by PP 20/2026. In contrast to Vietnam, under PP 20/2026, Indonesia does not set a limit to the periods this tax relief is available to individual taxpayers and corporate taxpayers in the form of sole proprietorship LLCs, although cooperatives are limited to a maximum of four years from the time of registration.

Under the recently issued PP 20/2026, corporate taxpayers other than sole proprietorship LLCs will no longer be allowed to use the MSME final income tax facility.

Transition Period for PP 20/2026

With the change in taxpayer eligibility, PP 20/2026 sets a transition period for corporate taxpayers other than sole proprietorship LLCs, such as limited partnerships, firms, LLCs, and village-owned enterprises and joint village-owned enterprises, allowing those whose final income tax period has not yet ended to continue to take advantage of the facility until the period is over.

Conclusion

Comparing Vietnam’s move with Indonesia’s regulations is relevant, even though the policy context is different. So far, Indonesia has chosen the route of restricting the subject and period of use of the MSME final income tax facility under PP 20/2026, instead of cutting taxes across the board as in Vietnam. Businesses need to pay attention to the deadline and category of taxpayers regulated by PP 20/2026, while monitoring whether there are any follow-up policies that lead to incentives similar to Vietnam’s.

For corporate groups with entities operating in Vietnam and other ASEAN jurisdictions, understanding the implications of cross-border fiscal policies is important for maintaining compliance while optimizing the group’s tax efficiency. The Andersen team in Indonesia is ready to help evaluate the impact of regional tax policies on your business operations, including with cross-jurisdictional tax planning and adjusting transfer pricing strategies. Contact the Andersen in Indonesia team for further consultation.

By Tommy Hendharto Oetomo – Managing Partner

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Refrences:

[1] Economic News. 2026. “Taxes Cut by 30%, Vietnam Floods the Business World with Incentives.” August 24, 2026. Available at  wartaekonomi.co.id/read630495.

[2] Government of Indonesia. 2026. “Regulation Number 20 of 2026 concerning Amendments to Government Regulation Number 55 of 2022 concerning Adjustments to Regulations in the Field of Income Tax.”