An Income Tax (PPh) regulation governing the collection of in-kind tax has been around since 2022, but only recently it has been in effect since July 1, 2023 due to pending technical regulations.
According to the Circular Letter of the Director General of Taxes NO SE-03/PJ.23/1984, enjoyment in the form of natura is defined as : any reward for the services that an employee, or family receives or earns from the company or employer in the form of non-monetary benefits.
Reimbursement / compensation that is related to work / services in the form of natura / enjoyment earned from January 1, 2023 to June 30, 2023 which has not yet been subjected to income tax withholding (PPh) by the employer / reimbursement provider (reward), on the income tax (PPh) payable must be calculated and paid by the recipient himself and reported in the Income Tax Return (SPT).
The Directorate General (DG) of Taxes of the Ministry of Finance has stated that this latest regulation on in-kind benefits is intended to promote a more equitable and impartial imposition of income tax on in-kind benefits.
The reason for implementing this regulation is to detect tax avoidance efforts made by granting in-kind items to employees. If the benefits received by the employees are considered as income, they can be borne by the company and reported in the Annual Tax Return.
PMK No.66 of 2023 also regulates the 11 (eleven) types of certain natura/enjoyment that are exempted from the tax object, namely :
In summary, PMK No.66 of 2023 is expected to support companies/employers to improve employee welfare through the provision of benefits and to be able to charge these costs as a deduction for the gross income earned. It also provides equality of treatment, so that the imposition of income tax (PPh) on a type of income regardless of the form of income, whether in monetary or other than monetary.
As such, the value of the facility included in the gross income component of the employee is not necessarily the value of the goods to be received, but the differences between the non-taxable amounts will be taxed.
