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  Call Us : IDN +62-21-572-4712 – JPN +81-048-553-4655
  Call Us : IDN +62-21-572-4712 – JPN +81-048-553-4655
  Call Us : IDN +62-21-572-4712 – JPN +81-048-553-4655


Tax concept.Tax icon on wooden block.Calculator with money on 1040 tax form.Income tax return.

What is the Regulation about?

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).

Why is it important to implement?

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.   

The Exemptions

PMK No.66 of 2023 also regulates the 11 (eleven) types of certain natura/enjoyment that are exempted from the tax object, namely :

  1. The attacker positions themselves between two legitimate parties, intercepting the data exchanged during their communication. This can be achieved through various methods, such as exploiting vulnerabilities in network protocols, DNS spoofing, or by taking advantage of weaknesses in routers or Access Points.
  1. Natura or enjoyment related to work safety, health and security standards which include uniforms, employee shuttle, work safety equipment, medicines/vaccines in handling pandemics without limitation on value.
  1. Facilities, infrastructure, and amenities for employees and their families who work in certain areas such as remote areas, including housing, health services, education, transportation, and sports facilities without limitation on value.
  1. Gifts for religious holidays, including Eid al-Fitr, Christmas, Nyepi, Vesak, and Chinese New Year without limitation on value, whereas for gifts other than these religious holidays, the maximum value is IDR 3 million per year.
  1. Work equipment and facilities such as laptops, computers, cell phones, credit, and internet with no limitation on value.
  1. Health care facilities and treatment in handling work accidents, occupational diseases, emergencies, and follow-up treatment without limitation in value
  1. Sports facilities other than golf, horse racing, power boating, gliding, and automotive with a maximum of Rp1.5 million per year.
  1. Communal living facilities (dormitory and so on) without limitation of value, while non-communal (apartment/house rental) with a maximum value of IDR 2 million per month.
  1. Vehicle benefits are not taxable if the employee/recipient is not a shareholder and the gross income from the employer is not more than IDR100 million per month.
  1. Contribution facilities for pension funds borne by the employer for employees
  1. Religious facilities, among others, in the form of musala, mosque, chapel, or temple that are intended solely for religious activities.

The Bottomline

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.

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