Government Delays Mandatory UMKM Financial Reporting via FRSW

The Ministry of Finance announced that micro, small and medium enterprises (UMKM) are not yet required to submit financial statements through the Financial Reporting System for the Treasury (FRSW). The obligation will be introduced gradually starting in late 2025. The decision was disclosed during a coordination meeting of the Directorate General of Taxes.

The reporting requirement currently applies first to financial‑sector entities under Presidential Decree No 43/2025, including banks, insurance companies, pawnshops, fintech firms and bank borrowers. The measure aims to improve taxpayer data transparency by leveraging bank‑account data sharing, NIK‑NPWP integration and the Core Tax system. It complements broader government efforts to identify untapped tax potential.

Postponing the mandate for UMKM gives small businesses time to establish internal accounting systems without heavy administrative burden. A phased rollout is expected to broaden the tax base gradually while preserving compliance and minimizing disruption to UMKM operations. The Directorate General of Taxes will monitor readiness before extending the reporting scope.