PMK-105/2025

The Government has continued to provide the incentive of Article 21 Income Tax borne by the Government (PPh Pasal 21 DTP) for Fiscal Year 2026 as part of its economic stimulus policy. The incentive applies to certain types of employment income and is effective for the Tax Periods from January 2026 to December 2026. Under the latest regulation, the scope of eligible Business Classification Codes (Klasifikasi Lapangan Usaha or KLU) has been expanded, allowing a broader range of businesses to benefit from the incentive.

Employers eligible to utilize the incentive must operate in specific industries, which are footwear, textiles and garments, furniture, leather and leather goods, or tourism. In addition, the Employer must possess a principal KLU that is included in the list set out in the Appendix to the relevant Minister of Finance Regulation, which comprises a total of 133 eligible Business Field Classification Codes. The qualifying KLU must be recorded in the Directorate General of Tax (DGT) administrative system as of 1 January 2026 or, for newly registered taxpayers, as of the date of registration.

The incentive is granted to Permanent Employees and certain Non-Permanent Employees who receive income from an eligible Employer and meet the prescribed requirements. Eligible employees must have a Tax Identification Number (NPWP) or Single Identification Number (NIK) integrated into the DGT system. Permanent Employees qualify if they receive fixed and regular gross income of not more than IDR 10,000,000 per month, while Non-Permanent Employees qualify if they receive an average daily wage of no more than IDR 500,000 or a monthly wage of not more than IDR 10,000,000, provided they are not receiving other government-borne Article 21 tax incentives under separate regulations.

Employers utilizing the incentive are required to properly calculate, apply, and report the government-borne Article 21 Income Tax through the Monthly Article 21 Tax Returns for the January to December 2026 tax periods. The submission or any amendment of the relevant monthly tax returns must be completed no later than 31 January 2027. Failure to comply with this deadline will result in the incentive being deemed not granted, and the Employer will be obligated to remit the Article 21 Income Tax that should have been withheld to the state treasury.