Art 21 Income Tax Update PP 58 Year 2023

In order to in line with the mandate of Law No. 7 of 2021 Harmonization of Tax Regulations (HPP) and simplify the witholding tax calculation on Art 21, Indonesian Government issued Government Regulation No. 58 (GR-58) regarding Article 21 income tax rate on employment, service, and activity income received by personal.

Minister of Finance also issued Minister of Finance Decree (MoF) No.168 for the implementation guideline for GR-58. Following are the critical points to be aware : §Monthly Article 21 withholding tax calculation for January to November is to be performed using an effective tax rate (ETR), which classified based on the marital status and the range of monthly income received; §ETR is only represents an estimate tax rate and will be recalculated on December period; §The applicable monthly ETR for each range of income under each category can be seen as attachment in GR-58; §January to November tax calculation is calculated using a single rate as classified ETR and without any deduction; §In December tax calculation, the calculation method is the same as in the previous regulation (progressive income tax rate), which compensated the income tax that paid in January to November.

Based on the above, it is important to inform the calculation changes to the employee in order to avoid misunderstanding on withholding tax Art 21 on December period, which potentialy higher than previous period.

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