Choosing between forming a PT or a CV is no longer just a matter of business scale or the prestige of a company name. Since Government Regulation PP 20 of 2026 came into force on June 2, 2026, the tax calculus between these two business entities has changed significantly. This article covers the fundamental differences between a PT and a CV, as well as the impact of the latest tax rule you need to consider before making a decision.
Difference in Legal Entity Status
A PT (Perseroan Terbatas / Limited Liability Company) has legal-entity status, meaning a PT can hold rights and obligations separately from its owners. As a result, shareholder liability is limited to the capital they have paid in — personal assets cannot be seized to settle the company's debts (except under certain conditions, such as commingling of assets). A CV (Commanditaire Vennootschap / Limited Partnership), on the other hand, is not a legal entity but a form of partnership. The active partner (managing partner) is personally and unlimitedly liable for all of the company's debts, while the silent partner's (limited partner's) liability is limited to the capital they have contributed.
Difference in Capital and the Formation Process
A PT generally requires a more formal formation process: a notarial deed, approval from the Ministry of Law as a legal entity, and authorized capital determined by agreement among the founders in accordance with the Job Creation Law (with no specific minimum authorized capital for a micro/small-business PT). A CV has a relatively simpler and faster formation process because it does not require legal-entity approval — registration through the AHU (General Legal Administration) system as a non-legal-entity business is sufficient.
The Big Change: PP 20/2026 Removes PT and CV from the 0.5% Final Income Tax
This is the most important update this year. Previously, under PP 55/2022, small businesses could enjoy a final Income Tax (PPh) rate of 0.5% of turnover, with usage periods of: a PT for a maximum of 3 tax years, and a CV, general partnership (firma), cooperative, sole proprietorship PT, and village-owned enterprise (BUMDes) for a maximum of 4 tax years.
However, Government Regulation PP 20 of 2026, enacted on June 2, 2026, fundamentally changes this provision. Business entities in the form of a CV, general partnership, and PT (other than a sole proprietorship PT) have officially been removed from the list of taxpayers eligible for the 0.5% final income tax rate. What remains eligible now is only: individual taxpayers, sole proprietorship PTs (Perseroan Perorangan), and cooperatives. For a PT or CV that was already using the final income tax facility before this rule was issued, they may continue to use it until the period already in progress ends — with no extension afterward. After that, the PT or CV must switch to the standard corporate income tax scheme under the normal rates of Article 17 of the Income Tax Law.
Practical Impact for Business Operators
This change makes the "Perseroan Perorangan" (Sole Proprietorship PT) entity increasingly attractive for micro and small-scale business operators who want to keep enjoying a low final tax rate, since this entity remains among those excluded from the removal. Meanwhile, prospective founders of a conventional PT or a mid-scale CV need to factor standard corporate income tax projections into their financial planning from the outset, rather than relying on the 0.5% final rate as before.
Which Is More Suitable: PT or CV?
A PT is more suitable for a business planning to grow large, bring in investors, participate in government/state-owned enterprise tenders that require legal-entity status, or clearly separate personal risk from business risk. A CV remains relevant for small-to-medium-scale family businesses that prioritize speed and simplicity of formation, provided the active partner truly understands the consequences of unlimited personal liability. With the shift in tax incentives following PP 20/2026, choosing a business entity should now ideally involve a medium-term tax projection simulation, not legal-structure considerations alone.
Conclusion
PP 20 of 2026 marks a policy shift that now directs the 0.5% final tax incentive toward individual business operators and cooperatives, rather than PT or CV entities in general. Before deciding on a business entity, it's important to consider not just the liability and capital structure, but also long-term tax burden projections under this latest regulation.
Business Licensing Division, PT Legalku Multi Digital, Semarang.