PPh21 Calculation

An Overview of Indonesia’s Income Tax (PPh21) Regulations Updates

In late 2023, the government introduced Peraturan Pemerintah (PP) 58/2023, marking a crucial update focused on simplifying the calculation of the effective rate for withholding PPh 21 or Income Tax Article 21. PPh 21 is a tax category applied to various forms of income, including salaries, wages, honoraria, allowances, and other payments received by employees.

This modification addresses the necessity for a more streamlined process, as the previous formula was considered excessively complex and susceptible to errors.

Key Changes in PPh21 Calculation

The core of the update centers around the implementation of the Tarif Efektif Rata-rata (TER) or average effective rate. TER serves as the percentage rate used to calculate PPh21 for each taxpayer, with variations based on their PTKP (non-taxable income) status and gross salary. So, under the new PP regulations, PPh21 is now calculated solely by multiplying the taxpayer’s gross income by their respective TER.

Shortly after this update, PMK 168/2023 was issued. This document serves as a detailed guide, explaining and clarifying how PP 58/2023 should be put into practice.

Concerning the new tax calculation, the next question is: how do I know my TER rate? Let’s delve deeper into it!

Understanding TER

TER is categorized into two types: Monthly TER and Daily TER, determined by the taxpayer’s employment type.

Exploring Monthly TER

Monthly TER is applied to permanent or full-time employees receiving a monthly income. The system categorizes taxpayers into three groups based on their PTKP Status, which are listed below.

Moreover, the TER rate varies within each category depending on the taxpayer’s gross monthly salary. Here is a comprehensive list of the Monthly TER rates:

Table PPH 21

Exploring Daily TER

Daily TER, on the other hand, caters to freelancers with daily income. The TER rate in this category is categorized as follows:

PPh21 Calculation - Monthly Ter

Determining Your PPh 21

As previously mentioned, the latest regulation was crafted to streamline the calculation of PPh 21. To calculate your PPh 21, use the following updated formula:

PPh21 Calculation - period

Daily Worker Employee

  • For daily income up to IDR2,500,000, the daily tax is calculated as Daily Gross Income x Daily TER.
  • For daily income exceeding IDR2,500,000, the daily tax is calculated as Daily Gross x 50% x Tax rate in Article 17.

In the case of income received on a non-daily basis, the gross income is the average of the daily income.

PMK 168/2023 explains more detailed calculations regarding the changes to the old regulation. It also includes sample calculations for a better understanding. In summary, the to-be tax calculation scheme for all employee types is reflected as follows:


Conclusion:

In summary, the recent adjustments to Indonesia’s Income Tax (PPh21) Regulations signal a notable progression toward a more efficient and accurate tax calculation framework. The implementation of the Tarif Efektif Rata-rata (TER) underscores a commitment to simplifying processes and improving transparency.

These updates aim to not only facilitate the calculation of PPh21 but also contribute to the overarching goal of creating a clearer and more error-resistant tax environment. As taxpayers adapt to these changes, the emphasis on TER stands as a key element in achieving a streamlined and effective income tax system in Indonesia.

As taxpayers, it’s crucial for us to understand Indonesia’s changing tax rules. Amidst the constant changes and adjustments, maintaining awareness becomes especially vital, especially for business owners ensuring on-time and accurate salary payments to employees.

Fortunately, you can rely on DataOn HRIS, SunFish Workplaze, which offers a comprehensive Payroll Management Software designed to seamlessly adapt to these changes. Additionally, our Payroll Outsourcing Services provide end-to-end support for your payroll processing needs.

Backed by over two decades of experience in the industry, we are committed to alleviating your payroll and tax-related challenges.

Ready to elevate your payroll process? Reach out to us now, and let DataOn HRIS be your trusted partner!

Scroll to Top