Article 21 Income Tax Withholding Rate on Income Related to Employment, Services, or Activities of Individual Taxpayers.

On 27 December 2023, the Government issued PP No. 58 Year 2023 for the provisions on Article 21 Income Tax calculation, which became effective on 1 January 2024. This Government Regulation revokes the provisions of Article 2 paragraph (3) of Government Regulation Number 80 Year 2010.

The main change of PP No. 58 Year 2023 from PP No. 80 Year 2010 is related to the effective rate imposed on gross income, both on a monthly and daily basis. This rate applies for the tax period except for the last tax period whereby in the last tax period, the calculation of Article 21 Income Tax uses the income tax rate of Article 17 paragraph (1) of the Income Tax Law.

The monthly effective rate is categorized based on the amount of non-taxable income according to the marital status and number of dependents of the taxpayer at the beginning of the tax year.  The monthly effective rate is divided into three categories. Category A is applied to unmarried without dependents, unmarried with 1 (one) dependent; or married without dependents. Meanwhile, category B is applied to unmarried with 2 or 3 dependents, married with 1 or 2 dependents. Category C is applied to marriages with 3 dependents. The effective rates also apply on a daily basis. This rate is determined together with the amount of gross daily income for each rate.