Indonesia releases tax regulations on food and beverage provisions to employees

Also shared in International Tax Review (ITR) website

On December 19 2018, Indonesia’s Minister of Finance (MoF) issued regulation No. 167/PMK.03/2018 (PMK-167) regarding the provision of food and beverages to all employees, and compensation in the form of benefit in kind (BIK) in certain regions that can be deducted from gross income. PMK-167 replaces the previous regulation: MoF Regulation No. 83/PMK.03/2009 (PMK-83). The benefit in kind that can be deducted from the employer’s gross income are as follows.

Provision of food and beverages

The provision of food and beverages to all employees relating to the performance of work is covered by the regulation. The provision also covers food and beverage coupons given to employees who are unable to enjoy those food and beverages in the workplace, i.e. employees in marketing, transportation and on other business trips.

Benefit in kind related to region of work

Compensation in the form of a BIK is provided in relation to work in a certain region in order to support government policies to encourage development in that certain region. The compensation covers residence (including housing), health services, education, religious services, transportation, and sports (excluding golf, power boating, horse racing, and gliding).

In relation to transportation in the new BIK regulation, PMK-167 specifically governs that it is only related to the beginning and the end of an assignment. The certain region facility is given for a period of five years, and it can be extended for another five years, provided the location still meets the requirements as a “certain region”. Especially for special mining business license (IUPK) holders, the period of “certain region” is 10 years and can be extended for another 10 years, provided the location still meets the requirements as a “certain region”.

Benefit in kind related to safety

Provision of a BIK in situations where it is a necessity to carry out the work with safety equipment or because of the nature of the work requires it are also included. The benefit shall be related to the workers’ safety as required by a government institution handling manpower. BIK covered include:

  • Clothing and safety equipment;
  • Uniforms for security personnel;
  • huttle transport for employees;
  • Lodging for ship crews and the like; and/or
  • Taxpayer’s vehicles that are used by certain employees.

If the BIK has use for more than one year, it should beexpensed through depreciation. If not, then it is directly expensed.

Especially for vehicles used by certain employees, 50% of the depreciation and the maintenance expense is allowed to be a tax-deductible expense.

This regulation is effective from December 19 2018.

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