<![CDATA[Background: Micro, Small, and Medium Enterprises (MSMEs) are economically strategic, yet tax participation remains uneven. Indonesia applies a 0.5% Final Income Tax on qualifying gross turnover under Government Regulation Number 20 of 2026. Despite tariff simplification, literacy, administrative, fairness, trust, and working-capital constraints may affect compliance and business continuity. Objective: This study examines MSME Final Income Tax implementation and identifies conditions supporting or inhibiting tax compliance and perceived business sustainability. Methods: A qualitative descriptive-evaluative case study involved 16 purposively selected informants comprising micro- and small-enterprise operators, tax officers, consultants, academics, and MSME facilitators. Data were collected through interviews, observation, documentation, and focus-group discussions, then analyzed thematically using Tax Morale Theory, the Slippery Slope Framework, and Responsive Regulation Theory. Results: The policy was not fully effective under the study’s qualitative criteria. Low tax literacy, administrative and digital burdens, perceived inequity in turnover-based taxation, and uneven trust and facilitation constrained voluntary compliance and could pressure working capital. Thin-margin businesses perceived greater burdens, while responsive consultation and clearer services strengthened trust and willingness to comply. Conclusion: Integrating the three theories explains how intrinsic willingness, institutional trust, legitimate authority, and proportionate regulatory responses jointly shape MSME compliance.]]>
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