Indonesian tax payments from employees have doubled in the last 11 years.

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Adi Ahdiat 27/12/2022 12:50 WIB

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State revenue from Article 21 Income Tax (PPh), or employee tax, has increased significantly over the past eleven years.

Realization of Central Government Revenue from Employee Tax Payments (2011-2021)

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Realization of Central Government Revenue from Employee Tax Payments (2011-2021)

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State revenue from Article 21 Income Tax (PPh 21) or employee tax has increased significantly over the past eleven years.

Based on the Director General of Taxes Regulation Number PER-16/2016, Article 21 PPh is a tax on salaries, wages, honorariums, allowances, and other payments of any name and form related to work or position, services, and activities carried out by domestic individual taxpayers.

According to the audited Central Government Financial Report (LKPP), in 2011, state revenue realization from Article 21 PPh only reached Rp66.75 trillion. In subsequent years, revenue from this sector continued to increase, as shown in the graph.

Cumulatively, during the 2011-2021 period, employee tax payments grew by 118% or doubled.

New Employee Tax Rate, Potential for Further Increase in Payments

The government has not yet announced the revenue figures from this PPh for 2022. However, Minister of Finance Sri Mulyani stated that there was another increase this year.

"(Revenue realization) from Article 21 PPh, namely employee tax, has increased. This means that our economic recovery is accompanied by the growth of employees, whether through recruitment or increased income, because the tax paid increased by 19.58% compared to last year," said Sri Mulyani at the APBN Kita Press Conference, Tuesday (20/12/2022).

"In the first, second, and third quarters of 2022, revenue realization from Article 21 PPh consistently increased. In the fourth quarter, namely October, November, and December, it also still grew in double digits. This is good, meaning that the indicator of employee income has increased, as shown by the tax," she continued.

In 2023, employee tax payments are also potentially to continue rising. This is because President Jokowi has issued Government Regulation (PP) Number 55 of 2022, which affirms the implementation of a progressive tax rate. This means that the higher an employee's income, the higher their tax rate.

Here are the details of the latest progressive Article 21 PPh tax rates in the Law on Harmonization of Tax Regulations, which is the basis for PP Number 55 of 2022:

1. Taxable Income (PKP) up to Rp60 million/year: 5% tax
2. PKP Rp60 million - Rp250 million/year: 15% tax
3. PKP Rp250 million - Rp500 million/year: 25% tax
4. PKP Rp500 million - Rp5 billion/year: 30% tax
5. PKP > Rp5 billion/year: 35% tax

The amount of income tax to be paid by employees is calculated from the PKP, which is the total net annual employee income minus the Non-Taxable Income (PTKP), the value of which is set by the government at Rp54 million.

Therefore, if an employee has a net income of Rp64 million/year, the tax calculation is as follows:

* Rp64 million (annual net income) - Rp54 million (PTKP) = Rp10 million (PKP)
* Rp10 million (PKP) x 5% (Article 21 PPh) = Rp500,000 (income tax payable per year)

Editor : Adi Ahdiat

"Disclosure: This is an AI-generated translation of the original article. We strive for accuracy, but please note that automated translations may contain errors or slight inconsistencies."

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Indonesian tax payments from employees have doubled in the last 11 years.

Indonesian tax payments from employees have doubled in the last 11 years.

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Indonesian tax payments from employees have doubled in the last 11 years.

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