President Jokowi Releases New Employee Tax Rules

Jakarta – Indonesian President Joko Widodo (Jokowi) has issued new tax regulations regarding the effective rate for withholding income tax (PPh) on January 1, 2024

This is stated in Government Regulation Number 58 of 2023 concerning Income Tax Withholding Rates Article 21 on Income in Connection with Work, Services or Activities of Individual Taxpayers which was announced on December 27, 2023. 

Through this regulation, the tax withholding rate consists of a monthly effective rate or a daily effective rate. 

The monthly rate is categorized based on the amount of non-taxable income, which corresponds to the marital status and number of dependents of the taxpayer at the beginning of the tax year. 

The monthly effective rate is divided into several categories, including the following:   

1. Effective monthly rate 

The effective monthly rate is categorized based on Non-Taxable Income (PTKP) according to marital status and the number of dependents of the taxpayer at the beginning of the tax year. 

The effective monthly rate consists of three categories, namely: 

Category A:

Category A is applied to the gross monthly income received or obtained by income recipients with PTKP status, unmarried without dependents (TK/0), unmarried with 1 dependent (TK/1), and married without dependents (K/0). 

Rates for this category apply to monthly income up to IDR 5.4 million, and up to 34 percent for income above IDR 1.4 billion. 

Category B: 

Category B is applied to the gross monthly income received or obtained by income recipients with PTKP status, unmarried with 2 dependents (TK/2), unmarried with 3 dependents (TK/3), married with 1 dependent (K/ 1), and married with 2 dependents (K/2). 

This category rate applies to monthly income up to IDR 6.2 billion, and up to 34 percent for income above IDR 1.405 billion. 

Category C: 

Category C is applied to the monthly gross income received or obtained by income recipients with married PTKP status with 3 dependents (K/3). 

This category rate applies to monthly income up to IDR 6.6 million, and up to 34 percent for monthly income above IDR 1.419 billion. 

2. Effective daily rate 

In addition, to the monthly effective rate, the government also applies a daily effective rate of 0 percent. This rule applies to income up to IDR 450,000 and 0.5 percent for income above IDR 450,000 to IDR 2.5 million.