The Directorate General of Taxes (DJP) acknowledges approximately 400 scenarios for WHT Art 21 calculations. This complexity leads to administrative burdens for both taxpayers and tax authorities. The government, in light of coretax system implementation, aims to simplify the calculation of Withholding Tax Article 21 using Average Effective Rate (TER) starting 2024.

Planned TER scheme:

1. For permanent employees, retirees, and civil servants/military/police personnel, Art.21 will be calculated using Monthly TER. For the month of December or latest working month, it is required to recalculate total gross income minus deductible, multiplied by normal income tax rates as per Article 17 of the Income Tax Law, deducted by previous months TER.

There are three TER categories based on marital status, as follow:

a. TER A: for individuals with marital status of single (S/0), single with 1 dependent (S/1), and married with 0 dependent (M/0).

b. TER B: for individuals with marital status of single with 2 dependents (S/2), married with 1 dependent (M/1), single with 3 dependents (S/3), and married with 2 dependents (M/2).

c. TER C: for individuals with marital status of married with 3 dependents (M/3).

2. For daily non-permanent employees WHT Art 21 will be calculated using Daily TER, applicable at the time of payment. Two types of rates will be applied, for gross income below IDR 450,000, an effective rate of 0%, and for gross income from IDR 450,000 to IDR 2.5 million, an effective rate of 0.5% will apply.

3. For non-employees, Art.21 income tax will be calculated using Non-Employee TER, with a tax base of 50% of gross income. There are 35 tariffs layers based on the amounts of gross income.

This publication is intended for general information only and should not be interpreted as substitute to any of  our professional advices. All of information contained in this publication refers to the featured regulation as per the date of this publication.