04:05
ISSUE 6
Conclusion While some details remain to be
Submit a notification of the utilization of the Government-borne and final income tax Article 21 facility to the Director General of Taxation (DGT) and receive validation. Submit a report on the realisation of the utilization of the facility to the DGT. With the eligibility criteria clearly defined, it is essential to understand the tax and social security implications related to this benefit. Tax and Social Security Implications: Article 21 tax is borne by the Ministry of Finance (MoF). Employers are obliged to remit tax on behalf of the employees each month and seek reimbursement from MoF Article 21 tax borne by MoF should not be considered as taxable income of the employee i.e., Grossing up of income not applicable Social Security remittances are not impacted as the tax borne by MoF is not considered as income of the employee Tax is not deducted from the employee’s salary resulting in higher take-home pay Reporting Mandate: Employers are mandated to submit the following reports: Notification and realization report of the utilization of the facility through electronic channels available at MoF Proof of deduction for Article 21 tax borne by MoF Monthly periodic tax return with the details of Article 21 tax borne by MoF
clarified in the forthcoming Minister of Finance Regulation (MoFR), the current provisions regarding the Government- borne and final income tax Article 21 facility offer substantial benefits to both employers and employees, encouraging investment and relocation to the new capital. The implementation of such forward-thinking policies demonstrates the Indonesian Government’s commitment to the country’s development and economic growth.
Author: Pavithra Saravanan
Pavithra Saravanan is a highly skilled statutory
compliance expert with deep expertise in payroll regulations across various Asian countries. Currently, she serves as a Business Consultant at Akrivia Automation Private Limited, where she leverages her extensive knowledge to optimize compliance processes. With over 3.5 years of experience, she has successfully streamlined payroll compliance for more than 10 countries, ensuring adherence to local laws and regulations while enhancing operational efficiency. Her commitment to excellence and ability to navigate complex regulatory environments make her a valuable asset in the field of statutory compliance.
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