A. Update

The Directorate General of Taxation (DGT) has released a new regulation PER-2/PJ/2024 related to reporting by employer in accordance with the changes introduced in NOMOR 58 TAHUN 2023 and NOMOR 168 TAHUN 2023. The changes are as under:

• Format and Procedures for the creation of Withholding Tax Slip (WHT slip) under Income Tax Article 21 or 26
  Form 1721-VIII is a newly introduced monthly WHT slip that is required to be given to employees for the months from January to November.
  
  Existing WHT slips, as mentioned below, remain the same without any change:
  
  • a) Form 1721 – VI: WHT Slip Article 21 for Non-Final Tax and Article 26
  • b) Form 1721 – VII: WHT Slip Article 21 for Final Tax
  • c) Form 1721 – A1: WHT Slip Article 21 for Permanent Employees or retirees receiving periodic payments issued on last fiscal period.
• No WHT Slip in certain circumstances
  There is no requirement to issue WHT slips due to NIL tax withholding under following circumstances:
  
  
  • a) If income does not exceed the Non-Taxable Income Threshold (PTKP)
  • b) In case of issue of Tax exemption letter (Surat Keterangan Bebas/SKB)
  • c) If Income Tax under Article 21 is borne by the Government
  • d) When the provisions of a double taxation avoidance agreement apply.
• Submission of the Monthly Income Tax Return under Article 21 or 26 through Application e-Bupot 21/26
  Application e-Bupot 21/26 is the new tax reporting facility brought in by DGT as part of Directorate Jenderal Pajak (DJP) online portal for filing the monthly tax returns by employer.
  
  The monthly tax returns can be filed directly to the Tax Office in paper form (signed and stamped) or electronically (with e-signature). For more information on the filing conditions, please refer to the PER-2/PJ/2024 guidelines provided in the source section below.

B. Statutory Compliance Release Date: January 19, 2024

C. Effective Date: January 01, 2024

A. Update

Indonesian Government has brought in radical change in the individual taxation provisions by introducing the monthly taxation method in place of current annualized taxation method majorly to mitigate the complexity of being mindful of more than 400 scenarios and burden in terms of tax administration and fulfilling other obligations.

The Regulation No. 58 of 2023 (PP No 58 of 2023) issued by Ministry of Finance (MOF) covers the above- mentioned amendment in provisions related to Withholding Rates on Income Related to the work, services, or activities of individual taxpayers, the significant details for consideration are as under:

• The Income tax Article 21 withholding rates includes monthly and daily effective income tax rates (TER) in addition to the tax rates provided in Article 17 paragraph (1) letter a of the Income Tax Law.
• This effective monthly rate applies to employees working in private sector as well to state officials, civil servants, members of Indonesian National Military Forces, members of National Police of the Republic of Indonesia and retirees.
• For each month except the final tax period i.e., December the TER is applied on gross income of respective month while for the last tax period the guidelines outlined in Article 17 of the Income Tax Law remain without any change.
• The effective monthly rate is classified into three categories based on the marital status of the employee as on beginning of the tax year as tabled below:

Please refer to Attachment A, B, C and D of the source document attached below for details on monthly and daily effective tax rates.

B. Statutory Compliance Release Date: December 27, 2023

C. Effective Date: January 01,2024.

A. Update

The Ministry of Finance (MOF) has issued Regulation No. 136/PMK.03/2023 amending the already issued Regulation No. 112/PMK.03/2022 pertaining to Taxpayer Identification Number of Individual Taxpayers, Corporate Taxpayers, and Government Agency Taxpayers. This amended regulation provides for extension in the usage of Tax identification number (NPWP) until the stipulated effective date under certain circumstances, the significant details for consideration are as under:

• Resident Individual taxpayers are allowed to use Taxpayer Identification Number (NPWP) until June 30,2024 to access the tax administration services at a limited level.
• If the Resident Individual taxpayer’s data identity is invalid then, the NPWP with a 15-digit format can be used until June 30, 2024. They will no longer be able to continue using tax administration services without getting the identity validated from July 01,2024.
• The Branch taxpayer identification number in case of business entity shall be used till June 30, 2024, for exercising taxation rights and fulfilling the obligations.
• In case of resident individuals applying tax identification for the first time, the Director General of Taxation (DGT) will activate the NIK as NPWP and provide the 15-digit NPWP format until June 30,2024.

Additionally, if 16-digit NPWP format cannot be used by non-resident individual taxpayers, corporate taxpayers, and government institution taxpayers then 15-digit NPWP format can be used in place of that until June 30, 2024, for exercising of taxation rights and fulfilling tax obligations.

Hence, starting from July 01, 2024, NIK number will be completely replaced by NPWP in all the tax and other administration services.

B. Statutory Compliance Release Date: December 12, 2023

C. Effective Date: July 01,2024.

A. Update

For BPJS Healthcare contributions, the minimum salary or wage per month that is used for employees and participants other than state administrators, village heads and village apparatuses (PPU) shall be the regency/municipal minimum wage.

If the Regional Governments do not stipulate the regency/municipal minimum wage, the basis for calculation of amount of such premium shall be the provincial minimum wage.

Accordingly, Decree of the governor of Special capital region of Jakarta (DKI) Number 818 dated November 30, 2023, has changed the Provincial Minimum Wage capping for BPJS Healthcare for the province of Jakarta from Rp. 4.901.798 to Rp.5.067.381 per month. This means minimum contribution of RP. 253.369 per month must be made based on 5% (five percent) of the DKI Jakarta minimum wage.

B. Statutory Compliance Release Date: November 30, 2023

C. Effective Date: January 01, 2024

A. Update

Government of Indonesia has issued Government Regulation Peraturan Pemerintah (PP) No. 49 of 2023 on Implementation of Work Accident and Casualty Security Program (‘Occupational Accident Insurance’) part of BPJS Manpower as a second amendment to the existing Government Regulation No. 44 of 2015. The changes are as follows:

1. Change in Applicability (Article 2 and 5):

• The provisions of the above regulation will continue to not apply to State governing employees. In this amendment, further clarity has been provided on the employees governed by the State which are civil servant candidates, government employees with work agreements, members of the Indonesian National Army, members of the Republic of Indonesia State Police and students of the Republic of Indonesia State Police.
• For the above regulation, membership needs to be obtained mandatorily by participants working in the private sector while it is voluntary in the case of employees working for the state governing body. In such a case also only specific government regulation will be applied.

2. Change in contribution composition (Article 16A and 18A):

In case of participants receiving wages, the existing contribution rates under Work Accident Insurance (JKK) and Death Benefit program (JKM) have been recomposed to Job Loss Insurance Program (JKP) as tabled below.

3. Change in Intimation procedure (Article 25A, 25B and 43A):

• This amended regulation extends Healthcare services even for suspected Work Accidents and Occupational diseases. If the reported work accident/occupational disease is confirmed, then all the health care costs will be borne by BPJS Manpower if not it becomes the responsibility of Participant or BPJS Healthcare as the case may be.
• In addition to employers even the Participants, the families of participants, labor unions, and healthcare facilities providing medical services can report suspected Work Accidents or Occupational Diseases experienced by employees.

B. Statutory Compliance Release Date: October 06, 2023

C. Effective Date: October 06, 2023

A. Update

The Ministry of Finance has issued Regulation No. 66 Year,2023 (PMK-66) pertaining to Income Tax treatment of Remuneration/Compensation in relation to Works or Services received or earned in the form of Benefits in kind and/or Enjoyment (BIK).

This implementation regulation is a derivative to previously issued Law No 7 Year 2021 (HPP Law) and Government Regulation No 55 Year 2022 (PP-55/2022) as it provides for more detailed provisions on the extent of taxability and exemption of BIK exception items. The exemption limits stipulated in the regulation are as follows:

• Meal coupons provided to employees working out of the office including any form of reimbursement for food/beverages expenses is exempt up to IDR 2 million per month (or) value of food/beverages provided at work whichever is the higher.
• Gifts provided to employees other than on religious occasions are exempt up to IDR 3 million per year.
• Sports facilities other than for golf, horse racing, power boating, paragliding, and motorsports are exempt up to IDR 1.5 million per year.
• Non-communal housing facilities provided to employees i.e., apartment/house rentals are exempt up to IDR 2 million per month.
• Vehicle facilities provided to employees are totally exempt only if the employee is not a shareholder and the employee’s last 12 months average gross income does not exceed IDR 100 million per month.

While other exceptions released earlier on this portal with update titled "Clarification on Benefits-in-Kind" are completely exempt from tax without any specific limits.

B. Statutory Compliance Release Date: July 05, 2023

C. Effective Date: July 01,2023

A. Update

Based on the Notification number B/186/052023 dated May 09, 2023, the BPJS Ketenagakerjaan authorities have introduced the minimum wage cap limit of Rp. 1.000.000 for all the social security programmes covered under BPJS Manpower i.e., for BPJS old age, death, occupational and pension. Hence even if contribution base (Basic and Fixed allowance) falls below the stipulated national minimum wage, still contribution needs to be made on Rp. 1.000.000 to maintain quality of service or for providing benefits.

This amendment has an impact on reporting as well because employers cannot report wages less than IDR 1.000.000 starting from April 01, 2023, in SIPP Online portal.

B. Statutory Compliance Release Date: May 09,2023

C. Effective Date: April 01, 2023

A. Update

Government of Indonesia has issued Regulation Number 12 Year 2023 (“PP12/2023”) in relation to the decision to move its capital city to North Penajam Paser (East Kalimantan), named Nusantara. Further, to facilitate construction and development in Nusantara, various incentives have been provided to businesses for the investments and business activities undertaken in Nusantara.

Based on the above regulation, if the employer and employee satisfy all the below conditions then government-borne and final income tax Art.21 facility will be granted i.e., final tax on employee’s salary shall be borne by the government and shall not be considered as taxable or gross-up income. This facility is valid up till the tax year 2035.

As per Article 50 of PP12/2023, the employees who fulfil all the below conditions will be considered eligible:

1. Receive or obtain income from certain employers (refer to employer criteria below);
2. Reside in the territory of Nusantara;
3. Have a Taxpayer Identification Number (NPWP) that is registered with the Tax Office with its working area covering Nusantara

As per Article 52 of PP12/2023, the employers who fulfill below conditions will be considered eligible:

1. Residing, having a domicile, or having business activities in the territory of Nusantara.
2. Have a NPWP registered with the Tax Office with its working area covering the territory of Nusantara or a tax identity at the place of business activity located in the territory of Nusantara.
3. Have submitted a letter of notification of the utilization of government-borne and final income tax Art.21 facility to the Director General of Taxation (DGT) and have received validation.
4. Have submitted a report on realization of the utilization of government-borne final income tax Art.21 facility to the DGT.

The guidelines on utilization of this tax facility and implementing/derivative rules will be further stipulated by Ministry of Finance Regulation (MoFR) that is yet to be issued.

B. Statutory Compliance Release Date: March 06, 2023

C. Effective Date: March 06, 2023

A. Update

Pasal 29 of PP Nomor 45 Tahun 2015, Penyelenggaraan Program Jaminan Pensiun (pension insurance program) stipulates that, BPJS Ketenagakerjaan shall annually adjust the amount of the maximum wages by using a multiplying factor of 1 (one) plus the previous year’s annual growth rate of Gross Domestic Product (GDP). The adjusted maximum limit of wage will be used as the basis for calculation of Pension Security Contribution.

The announcement regarding adjustment to maximum limit of wages will be made not later than 1 (one) month after an institution organizing governmental affairs in the field of statistics announces data on GDP.

The Central Statistics Agency (BPS) has announced in Statistical News BPS No.15/02/Th. XXVI dated February 06, 2023 stating that the growth of GDP in Indonesia for 2022 will increase by 5.31 %.

Effective March 01, 2023 BPJS Ketenagakerjaan through notification number B/77/022023 dated February 27, 2023 has accordingly increased the Maximum wage capping of JP Contribution by 5.31% i.e., from Rp. 9.077.600 to IDR 9.559.600.

B. Statutory Compliance Release Date: February 27,2023

C. Effective Date: March 01, 2023

A. Update

In the tax year 2022, based on the release of Fifth Amendment of the General Taxation known as Rancangan Undang – Undang Harmonisasi Perpajakssan (RUU HPP) all the Benefits-in-kind (BIKs) were made tax deductible for the employers and taxable in the hands of employees except the following

1. Food and beverages for all employees,
2. BIKs in certain remote area,
3. BIKs that are necessary to carry out work assignments,
4. BIKs that are financed by Government Revenue and Expenditure Budget, and
5. BIK’s with certain limitation

kindly refer to the update titled “Fifth Amendment of the General taxation“ released earlier on this portal for details.

Recently through the issue of Government Regulation Number 55, Year 2022 (PP 55/2022) additional details pertaining to the above exceptions have been provided as mentioned below

1. Food and beverage for all employees includes those provided by the employer directly at workplace or as a food coupon or ingredients with certain value, the guidelines for determining value of ingredients will be further regulated by Ministerial Regulation that is yet to be published.
2. BIKs in certain remote area includes facilities provided to employee’s and their family members in the form of Residence, Health services, Education, Transportation etc. at workplace situated in area with inadequate economic infrastructure.
3. BIKs for carrying out work assignments provided by the employer includes security measures for employees as required by certain ministries or institutions such as Uniform, Work safety equipment, virus identification kits, vaccines and other supporting facilities for handling pandemic or national disaster etc.
4. The method of assessing the values of BIKs and details on BIKs with certain limitation will be further regulated by Ministerial Regulation that is yet to be published.

For complete information, please refer to Article 24 to 30 of the regulation provided in the source link.

B. Statutory Compliance Release Date: December 20, 2022

C. Effective Date: January 01, 2023

A. Update

For BPJS Healthcare contributions, the minimum salary or wage per month that is used for employees and participants other than state administrators, village heads and village apparatuses (PPU) shall be the regency/municipal minimum wage.

If the Regional Governments do not stipulate the regency/municipal minimum wage, the basis for calculation of amount of such premium shall be the provincial minimum wage.

Accordingly, Decree of the governor of Special capital region of Jakarta (DKI) Number 1153 dated November 28, 2022, has changed the Provincial Minimum Wage capping for BPJS Healthcare for the province of Jakarta from Rp. 4.641.854 to Rp. 4.901.798 per month. This means minimum contribution of RP. 245.090 per month must be made based on 5% (five percent) of the DKI Jakarta minimum wage.

B. Statutory Compliance Release Date: December 02, 2022

C. Effective Date: January 01, 2023

A. Update

The Ministry of Manpower has recently issued Minister of Manpower Regulation (Permenaker) No. 10 Year 2022 regarding Guidelines for Providing Government Assistance in the form of Salary/Wage Subsidies for Workers. This assistance is basically provided to workers for coping up with the surge in prices , especially fuel prices.

The provision of Government Assistance in the form of Salary/Wage subsidies as referred to in Article 3 paragraph (1) of Permenaker No 10 Year 2022 is prioritized to those workers, not in receipt of any assistance in the current fiscal year from the programmes listed below before the assistance referred above is distributed

• Pre-employment card program,
• Family hope program, or
• Micro-business productive assistance program

Eligibility criteria:

Workers fulfilling the below conditions are eligible for a subsidy amounting to IDR 600,000 and it will be paid at once through one of the banks by the government to workers account directly or PT Pos Indonesia.

• Indonesian citizen i.e., proved by the ownership of the National ID Card
• Active participants in BPJS Manpower until July,2022
• Person receiving a maximum salary of IDR 3,500,000 (three million five hundred thousand rupiah) per month,
• Additionally, if district/city minimum wage is greater than IDR 3,500,000.00 (three million five hundred thousand rupiah) then that district/city minimum wage rounded up to full hundred thousand should be considered for determining the eligibility
• If the region does not stipulate a minimum wage district/city, then in such case the minimum wage of province rounded up to full hundred thousand.
• Person not working as a Civil Servant or TNI/Polri; and
• Person with active account in certain banks, i.e., Bank BNI, BRI, Mandiri, BTN, and Bank Syariah Indonesia.

Companies are required to update the prospective recipients’ data needed for verification and validation process, i.e., bank account numbers, bank names, names registered in the bank accounts, address, provinces, regencies/cities, postal codes, mobile phone numbers through the SIPP Online application (BPJS Manpower System) not later than September 23rd, 2022.

B. Statutory Compliance Release Date: September 05, 2022

C. Effective Date: September 05, 2022

A. Update

The Ministry of Finance (MOF) has issued Regulation No. 112/PMK.03/2022 regarding the new guidelines pertaining to Taxpayer Identification Number of Individual Taxpayers, Corporate Taxpayers, and Government Agency Taxpayers. The significant details for consideration are as under:

• Resident Individual taxpayers can use National Identity Number (NIK) as Taxpayer Identification Number (NPWP) starting from July 14, 2022 if their data identity is valid when the Government performs matching process with population data in the Ministry of Home Affairs through the Directorate General of Population and Civil Registration.
• If the Individual taxpayer’s data identity is invalid then only NPWP with a 15-digit format can be used until December 31, 2023 i.e., in few tax administration services and shall process their data validation to continue using tax administration services.
• Employees without NPWP are still required to activate their NIK with the Tax Office and the Tax Office in turn will provide NPWP with 15-digit number that can be used until December 31, 2023. They will remain subject to 20% higher tax rate till they obtain NPWP.

The current tax return system, i.e., e-SPT Article 21 does not accommodate NIK as a replacement for NPWP as the derivative regulation is still awaited. Individual taxpayers will have to use NIK as a complete replacement to NPWP in tax administration services starting from January 01, 2024.

B. Statutory Compliance Release Date: July 08, 2022

C. Effective Date: July 08, 2022

A. Update

The Ministry of Manpower has recently issued Minister of Manpower Regulation (Permenaker) No. 4 Year 2022 regarding Procedures and Payment Requirements for Old Age Benefits (JHT). Further the Permenaker No. 19 Year 2015 and Permenaker No. 2 Year 2022 are no more applicable.

Below are the changes for contribution withdrawal:

Eligibility for JHT Benefits

Previously JHT benefits for the participants reaching retirement age shall be received in cash and paid as lumpsum at the time of either:

• Resignation,
• Termination or
• Participant leaving Indonesia forever

Additionally, it can now be paid out in the below situations as well:

• Participants reaching retirement age as stipulated in the employment agreement, company regulations or collective labor agreement or reaches the age of 56 (fifty-six) years; or
• on expiration of the term in the employment agreement; or
• if the participants are no longer earning wages due to termination of work.

Documents required for withdrawal of JHT Benefits

• In case of withdrawal of JHT benefit by the participants, a resignation statement (in case of resignation) or termination report (in case of termination) needs to be provided from the employer in addition to the below documents:
• BPJS Manpower Participant Card
• Identity card or other proof of identity
• Also, the JHT benefit can be paid out on submission of the required documents in lumpsum after one month from the effective termination date.

Other conditions for withdrawal

Participants applying for withdrawal of JHT benefit but still have arrears. In such case, BPJS Manpower will first pay the JHT benefits to participants in alignment with the contribution that have been paid by the employer and participants.

The outstanding contributions will be then billed by BPJS Manpower to the employer. On settlement of dues the BPJS Manpower will be obliged to pay the remaining balance of JHT benefits to participants or heirs of participant.

B. Statutory Compliance Release Date: April 26, 2022

C. Effective Date: April 26, 2022

A. Update

Pasal 29 of PP Nomor 45 Tahun 2015, Penyelenggaraan Program Jaminan Pensiun (pension insurance program) stipulates that, BPJS Ketenagakerjaan shall annually adjust the amount of the maximum wages by using a multiplying factor of 1 (one) plus the previous year’s annual growth rate of Gross Domestic Product (GDP). The adjusted maximum limit of wage will be used as the basis for calculation of Pension Security Contribution.

The announcement regarding adjustment to maximum limit of wages will be made not later than 1 (one) month after an institution organizing governmental affairs in the field of statistics announces data on GDP.

The Central Statistics Agency (BPS) has announced in Statistical News BPS No.14/02/Th. XXV dated February 07, 2022 that the growth of GDP in Indonesia for 2021 will increase by 3.69 percent.

Effective March 01, 2022 BPJS Ketenagakerjaan through notification number B/2531/022022 dated February 25, 2022 has accordingly increased the Maximum wage capping of JP Contribution by 3.69% i.e., from Rp. 8.754.600 to Rp. 9.077.600.

B. Statutory Compliance Release Date: February 25, 2022

C. Effective Date: March 01, 2022

A. Update

Government has issued Ministry of Finance regulation no. 3 for the year 2022 relating to the Tax Incentive for Taxpayer affected by Corona Virus Disease. The amendments have been made on the submission of realization report for 2021, and the tax incentive has not been extended. The changes announced for submission of realization report are as follows:

• If the Company has not submitted the realization report for tax incentive as per Article 21 of Financial year 2021, the Company may submit the realization report by March 31, 2022 at the latest.
• The Company may submit the amendment of realization report for tax incentive as per Article 21 of Financial year 2021 for the period January to December 2021 by March 31, 2022 at the latest.

If Companies fail to meet the above conditions, they are not eligible to utilize the tax incentive as per Article 21 Financial year 2021.

B. Statutory Compliance Release Date: January 25, 2022

C. Effective Date: January 25, 2022

A. Update

In accordance with the provisions of Article 15 paragraph (3) of government regulation (PP) Number 45 of 2015 regarding the implementation of the pension insurance program and Article 6 of the Minister of Manpower Number 29 of 2015, the retirement age shall increase by one year for every three subsequent years until it reaches the retirement age of 65 years. Based on the notification number B/1786/012022 the retirement age for pension insurance program for the year 2022 will be 58 years.

B. Statutory Compliance Release Date: January 17, 2022

C. Effective Date: January 01, 2022

A. Update

The lowest limit of Salary or Wage per month that is used as the basis for calculation of amount of Premiums for PPU Participants other than state administrators, village heads and village apparatuses, and Workers/employees shall be the regency/municipal minimum wage. If the Regional Governments do not stipulate the regency/municipal minimum wage, the basis for calculation of amount of Premiums as referred above shall be the provincial minimum wage.

In continuance to the issuance of Decree of Jakarta number 1517/IV-01/1221 dated December 16, 2021 amending the Provincial Minimum Wage capping for BPJS Healthcare of capital city of Jakarta from Rp. 44,16,186 to Rp.44,53,936 per month, a new Decree with Jakarta number 1726/IV-01/1221 dated December 27, 2021 has been released, it further amends the Provincial Minimum Wage capping for BPJS Healthcare of capital city of Jakarta from Rp.44,53,936 to Rp. 46,41,854 per month. This means the minimum contribution of Rp. 2,32,093 per month must be made based on 5% (five percent) of the DKI Jakarta minimum wage.

B. Statutory Compliance Release Date: December 27, 2021

C. Effective Date: January 01, 2022

A. Update

The lowest limit of Salary or Wage per month that is used as the basis for calculation of amount of Premiums for PPU Participants other than state administrators, village heads and village apparatuses, and Workers/employees shall be the regency/municipal minimum wage. If the Regional Governments do not stipulate the regency/municipal minimum wage, the basis for calculation of amount of Premiums as referred above shall be the provincial minimum wage.

DKI Jakarta Governor No 1395 dated November 19, 2021 has changed the Provincial Minimum Wage capping for BPJS Healthcare specifically for the capital city of Jakarta from Rp. 44,16,186 to Rp.44,53,936 per month. This means minimum contribution of RP. 2,22,697 per month must be made based on 5% (five percent) of the DKI Jakarta minimum wage.

B. Statutory Compliance Release Date: December 01, 2021

C. Effective Date: January 01, 2022

A. Update

The Government has finalized the Fifth Amendment of the General Taxation which is known as Rancangan Undang – Undang Harmonisasi Perpajakan (RUU HPP).

Below is an overview of the most relevant amendments related to Income Tax Article 21 which impact payroll:

1. Tax treatment on Fringe Benefits

Fringe Benefits related to earning, collecting, or maintaining income are currently non-tax deductible for employers and non-taxable for employees. After the amendment, certain fringe benefits will be considered as tax deductible for the employers and taxable for employees.

Fringe Benefits that are presently not taxable for the employees are limited to meals and fringe benefits provided in certain remote areas. From tax year 2022, taxable fringe benefits will cover food and beverages for all the employees, fringe benefits provided in certain remote areas, fringe benefits that are necessary to carry out work assignments, fringe benefits that are financed by Government Revenue and Expenditure Budget, and certain fringe benefits with certain limitations, which will be regulated by a Government Regulation (PP).

2. Change in Rates and Bracket for Individual Income Tax

As per the amendment, there is a change in first two layers of the current tax bracket. In addition, individual taxpayers who earn annual income of more than IDR 5 billion will have to pay a larger amount of tax.

Tax Table

B. Statutory Compliance Release Date: October 07, 2021

C. Effective Date: January 01, 2022

A. Update

On July 14, 2021, the Ministry of Finance (‘MOF’) has released Regulation PMK 82/2021 (‘The Regulation’) to extend the tax incentive under Article 21 PPh of PER -16/PJ/ 2016 (‘Article 21 PPh Incentive’) till tax period December 2021. The Regulation is announced in continuation with PMK 110 / PMK.03 / 2020 (‘PMK-110’) which provided for provision of tax incentives until December 31,2020 and PMK 9 / PMK.03 / 2021 (‘PMK-9’) which provided for provision of tax incentives until June 30, 2021

The Regulation has inserted Article 19A & 19B which provides the following:

Employers who have submitted Notification of Utilization of Article 21 PPh Incentives based on the Regulation of the Minister of Finance Number 9/PMK.03/2021 must resubmit the notification to be able to take advantage of the tax incentives by using the form through the “www.pajak.go.id” page on or before 15 August 2021.

Employers who have submitted realization reports and/or reports on the realization of rectification of the use of incentives, may submit a correction to the report on the realization of the January 2021 Tax Period up to the June 2021 Tax Period no later than October 31, 2021.

B. Statutory Compliance Release Date: July 14, 2021

C. Effective Date: July 01, 2021

A. Update

The Ministry of Finance (‘MOF’) has released Regulation PMK 9/2021 (‘PMK-9’ or ‘The Regulation’) to extend the Article 21 PPh of PER -16/PJ/ 2016 (‘Article 21’) tax incentive till June 30, 2021. The said regulation is announced in continuation with PMK 110 / PMK.03 / 2020 (‘PMK-110’) which provided for provision of tax incentives until 31 December 2020.

The Regulation has been made effective retrospectively from January 1, 2021 and allows the Companies to submit their application latest by February 15, 2021 who wish to continue with tax incentive for the year 2021. Further, any taxes already deducted in January 2021 under Article 21 can be carried forward / adjusted, as may be prescribed by the authorities.

As provided in PMK-110, the eligible taxpayers are required to prepare a monthly realization report, as per due date prescribed. Further in Regulation PMK-9, authorities have allowed taxpayers to revise the realization report at the latest by the end of the month, following the month of reporting deadline. Further, it has provided a grace period up till February 28, 2021 to taxpayers who have not submitted the realization reports for the year 2020.

The Regulation further emphasizes that failure to submit the realization report will result in the Article 21 and Final Income Tax incentives being invalid. Consequently, the unpaid tax must be repaid for the periods where the reports were not submitted.

B. Statutory Compliance Release Date: February 01, 2021

C. Effective Date: January 01, 2021

A. Update

The Ministry of Manpower had in past conveyed vide regulation SE Number M/11/HK.04/2020 that there shall be no change to the minimum wage for Financial Year (‘FY’) 2021 and the amount remains the same as for FY 2020. However, some provinces as provided below, have decided to change the minimum wage for FY 2021, thus not following the above mentioned regulation.

• DKI Jakarta for specified businesses.
• East Java
• South Sulawesi
• Yogyakarta
• Central Java

Meanwhile, the other 28 provinces have decided to follow the above regulation. Therefore, the minimum wage amount for these provinces will remain the same as the minimum wage for FY 2020. Regulation SE Number M/11/HK.04/2020 is applicable from October 31, 2020.

Minimum wage will impact the base amount of the minimum wage for the calculation of BPJS Healthcare contribution.

B. Statutory Compliance Release Date: October 26, 2020

C. Effective Date: October 31, 2020

A. Update

The Indonesian Parliament on October 6, 2020 approved the draft Omnibus Law on Employment Creation 1 . As per the draft law, there are changes on the Manpower law which may affect the employees’ compensations and benefits.  The draft law covers the following themes related to the employees’ compensations and benefits:

• The increase of maximum overtime hours
• The minimum wage will only be determined by the Provincial Government
• Change in the formula in calculating severance payment
• In case of work termination, the employee is entitled to receive a Security Contribution for Loss of Profession/Job (“Jaminan Kehilangan Pekerjaan”). The implementation of the Security Contribution will be stipulated further in a Government Regulation

The draft Omnibus Law on job creation would amend 73 laws and consists of 15 chapters and 174 articles. This draft Law has not been signed by the President and therefore it is not yet effective as on date. Any further developments on the above will be published as and when released by the authorities.

B. Statutory Compliance Release Date: October 06, 2020

C. Effective Date: N/A

A. Update

Regulation number 49/ 2020 provided the following clarifications in relation to new joiners:

For employees, who were only registered after July 2020, the Company can still obtain incentive for these employees if the first two months of their contributions are fully paid. This means that in the first two months, the normal rate will be used and then in the third month, the revised rate will be applied.

Further the board published a clarification on September 10, 2020, to depict how the adjustment of JKK/JKM will take place. As per the clarification:

For payroll calculation period of September 2020, the Company needs to include the adjustment of BPJS Contribution (i.e. 99% excess payment from August 2020). Please see below for the illustration:

In this case, the assumption is that the Company has paid full amount for BPJS contribution amounting to IDR 16,200.

B. Statutory Compliance Release Date: September 08, 2020

C. Effective Date: August 01, 2020

A. Update

The Indonesian Government issued a Regulation for Housing Savings program (Tapera) on May 20, 2020.

The highlights of the program are encapsulated below:

• 1. Employer is obliged to register its employees, facilitate the employee’s saving collection, pay to the Housing Savings Agency, and update the Agency for any change of data (e.g. salary increase, employees’ resignation).
• 2. There are few conditions, for employees who are required to participate in this program:
  • Employee should be minimum age of 20 year old or already married;
  • Monthly salaries should equal to or above the minimum wage.
• 3. The total saving is 3% from the compensation (i.e. salary + allowances) with below allocation:
  • Employer 0.5%;
  • Employee 2.5%.
• 4. The Employee participants to include local workers and expatriate workers working in Indonesia for at least six months.
• 5. The savings should be remitted to the Agency by the 10th of the following month.
• 6. Failure to meet the payment deadline will be subject to 0.1% administrative sanction per month of the savings which need to be paid.
• 7. The participation program will be over if:
  • Employee is retired;
  • Employee is passed away; or
  • Employee does not receive salary for 5 year in row.
  • If the employee’s participation to this program is already over, they will receive a refund from the savings amount plus any growth from the savings.

This is currently mandatory only for Government Companies and shall become mandatory for private companies once they register for this scheme. Currently they have an option to register within 7 years since the date regulation is signed i.e. May 20, 2027.

The detailed guidelines for the implementation of the same are still awaited from the authorities, therefore the impact and coverage of the same needs to be analyzed.

B. Statutory Compliance Release Date: May 20, 2020

C. Effective Date: May 01, 2020

A. Update

Indonesia BPJS Ketenagakerjaan Board vide Government Regulation Number 45 of 2015 (enclosed below) concerning the Implementation of the Pension Guarantee Program has revised the following:

• The highest limit for the basic wage calculation of BPJS (JP) pension contributions is Rp. 8,939,700 for payment of contributions w.e.f March 01, 2020.
• Pension benefits of at least Rp. 350,700 per month and a maximum of Rp. 4,207,200 per month, effective from February 1, 2020.

B. Statutory Compliance Release Date: February 12, 2020

C. Effective Date: March 01, 2020

A. Update

The Indonesian government released regulation number 49/2020 (‘regulation’) during COVID 19 relating to the adjustment of contribution to BPJS Manpower. This program is intended to provide incentive for the participants and the employers during this period.

The incentives offered are as follows:

• a) Relaxation on the contribution payment deadline;
• b) Discounts on JKK and JKM contribution; and
• c) Postponement on JP contribution payment.

A. Relaxation on the contribution payment deadline

Previously, the deadline to pay the contribution is on the fifteenth (15) of the following month. Under this regulation, the payment deadline will be extended to the thirtieth (30) of the following month. If the thirtieth (30) falls on the holiday/weekend, then the payment deadline will be first (1) working day before the last date i.e. thirtieth (30).

B. Discounts on JKK and JKM contribution

The government has provided 99 percent discounts on JKK (work accident insurance) and JKM (death insurance premium) contributions to be paid by employer. Accordingly, employer will only need to pay 1 percent of the contribution. The above discount is given to all participants who have paid contributions up to July 2020.

Since 1 percent of the contributions are paid by the employer, it is necessary to report only that portion that is paid by employer.

Further clarity is still awaited on the impact to be considered for retrospective effect.

C. Postponement on JP Contribution on payment

During the incentive period, the employer can postpone the payment of 99 percent of the employer’s contribution. Thus, the company can only pay 1 percent of its original contribution and pay the remaining 99 percent of the contribution (either in lump sum or in instalment basis) from May 15, 2021 to April 15, 2022.

To apply the above incentive, employers should meet the prescribed terms and conditions. Also, the above incentive is not applicable for employee contribution.

Additional important information on this regulation are as follows:

• This regulation is applicable for BPJS Manpower contribution
• This regulation came into force effective from September 1, 2020 i.e. contributions payable in September 2020 for the month of August 2020
• This regulation will remain effective till February 2020 i.e. contributions payable in February 2021 for the month of January 2021
• Penalties will be imposed if the companies fail to meet the payment deadline.

B. Statutory Compliance Release Date: September 08, 2020

C. Effective Date: August 01, 2020

A. Update

The Indonesia Government has announced an incentive of Article 21 income tax starting from April 2020 onwards wherein the employer needs to payback the taxes withheld from the employee’s gross regular income.

Employees who are entitled to receive this incentive should fulfil the following criteria:

• Employees whose gross regular income for a year is not more than 200 million.
• Employees who are working for companies in business of processing industry (Category C), the list can be found on page 16-25 of the regulation.
• Employees who are working for companies which have been designated as KITE (Ease of imports for Export purposes);
• The incentive is only applicable for employees who have Tax ID number (NPWP).

The incentive of Article 21 is to be paid by the employer to the employee together with the tax home pay. The Article 21 income tax borne by the Govt. is not considered as taxable income for the employee. Incentive of Article 21 income tax will be valid for 6 months.

This incentive will be applicable only for certain industries such as Chemicals and chemical goods industry, Motor vehicle, trailer, and semi-trailer industry, Food industry, Rubber, rubber goods, and plastic industry, Pharmaceutical, chemical and traditional medicine industry, Other transportation device industry, Non-metal excavated goods industry, Basic metal industry, Paper and paper goods industry, Electrical device industry, Ready-to-use clothing industry, Metal goods, non-machine and equipment industry, Textile industry, Beverage industry, Machine and equipment industry that is YTDL (Yang tidak dapat diklasifikasikan di tempat lain/”cannot be classified into other segment”), Computer, electronic devices, and optic industry, Printing and recording reproduction industry, Leather, leather goods, and footwear industry and Furniture industry etc.

B. Statutory Compliance Release Date: March 23, 2020

C. Effective Date: April 01, 2020 to September 30, 2020

A. Update

Considering the COVID–19 situation, on April 27, 2020 the Ministry of Finance (MoF) has decided to expand the tax incentive to other business sectors as well, including small and medium enterprises (SMEs).

Accordingly, the MoF issued Regulation 44/ PMK. 03/ 2020 which replaced Regulation 23/ PMK.03/ 2020.

The new regulation brought the additional points provided below:

• Extended the incentive from 440 business classification code (KLUs) to 1064.
• Companies that have bonded zone (Kawasan Berikat) license can also apply for the incentive.
• The realization report now needs to be submitted by the employers on monthly basis by 20th of the following month as compared to reporting required to be done every 3 months under Reg 23/2020.
• Format of realization report has been amended to capture monthly data.

B. Statutory Compliance Release Date: April 27, 2020

C. Effective Date: April 01, 2020 to September 30, 2020

A. Update

The Indonesian Govt has replaced the Regulation 44/ PMK.03/2020 with regulation 86/ PMK. 03/ 2020.

The highlights of Regulation 86/ PMK. 03/ 2020 are as under:

• The list of industries which can apply for the fiscal incentives is expanded from previously 1,062 business classification code (KLU) to 1,189 KLUs. Refer to the attached regulation page 26-50 for the list
• The Government borne ‘Article 21 income tax’ was extended up to period December 2020
• In the event that the Headquarter is included in the list KLU who can utilize the incentive Article 21, the realization report (both of Headquarter and Branch) will be reported only by the Headquarter
• The realization report for Article 21 has undergone changes. A new section has been incorporated in the report to capture Kode billing and Jumlah.

B. Statutory Compliance Release Date: July 16, 2020

C. Effective Date: April 01, 2020 to December 31, 2020