Grants to Micro-Businesses Exempt from Tax Without Donor Ties

JAKARTA, 11 November 2025 – Micro and small business owners (UMK) receiving grants must consider income‑tax (PPh) rules set out in Government Regulation No.55/2022. A grant is not automatically exempt from tax.

Article 7 paragraph (1) of the regulation exempts a grant when it is received by an individual running a micro or small enterprise and there is no business, employment, ownership, or control relationship with the donor. A business relationship involves regular transactions, while an employment relationship covers provision of services or direct activities. Ownership or control relationships include direct or indirect capital participation or control over the enterprise.

UMK status also requires either net assets not exceeding IDR 500 million (excluding land and buildings) or annual turnover up to IDR 2.5 billion. If these thresholds are not met, the grant may become taxable.