The government has determined that with the amendment of Law No. 7 of 1983 severally and finally by Law No. 36 of 2008 on Income Tax that it is necessary to harmonize the tax rates on income in the form of severance pay, pension benefits, old-age allowances, and old-age guarantees that are paid out once to employees. To this end the government has issued Regulation No. 68 of 2009. This regulation repeals and replaces Government Regulation No. 149 of 2000 on the same subject matter. The specific purpose of the regulation is to facilitate the implementation of Article 21(5) of Law No. 36 of 2008.
The regulation sets out that all of the previously noted benefits, when paid out all at once, are to be taxed as income pursuant to the provisions of article 21 and these deductions are to be final. It is worth noting that this one-off payment can also be a series of payments over the period of two calendar years where each installment is taxed at the relevant applicable rate. Therefore, there is no benefit to the taxpayer in receiving one’s benefits spread out over several payments and over two calendar years.
For the purposes of taxation it does not matter whether the employee receives the payment directly or indirectly through a third party (such as a fund manager). However, if these payments were made over a period of time then the employee is deemed not to have received that payment for the purposes of taxation under these provisions. This is explained in the Elucidations to Article 3(3) of the regulation.
For severance pay, the regulation sets out the following rates:
(a)
0% on gross payments up to IDR 50 million;
(b)
5% on gross payments above IDR 50 million and up to IDR 100 million;
(c)
15% on gross payments above IDR 100 million and up to IDR 500 million; and
(d)
25% on gross payments of more than IDR 500 million.
For the other benefits noted in this regulation the rates are:
a.
0% on gross payments up to IDR 50 million; and
b.
5% on gross payments above IDR 50 million.
Examples of how these calculations are to be made are contained in Articles 4 and 5 of the elucidations to the regulation. Any payment above the tax-free threshold is calculated progressively within the specific rates for each amount. Therefore, a severance payment of IDR 175 million is to be taxed in the following way:
Article 21 Income Tax
0%
x IDR 50,000,000
=
IDR 0
5%
x IDR 50,000,000
=
IDR 2,500,000
15%
x IDR 75,000,000
=
IDR 11,250,000
Total
=
IDR 13,750,000
Any additional regulations required to clarify any matters relating to this Government Regulation will be by way of Minister of Finance regulations.
This regulation has been in force since 16 November 2009.
The government has determined that with the amendment of Law No. 7 of 1983 severally and finally by Law No. 36 of 2008 on Income Tax that it is necessary to harmonize the tax rates on income in the form of severance pay, pension benefits, old-age allowances, and old-age guarantees that are paid out once to employees. To this end the government has issued Regulation No. 68 of 2009. This regulation repeals and replaces Government Regulation No. 149 of 2000 on the same subject matter. The specific purpose of the regulation is to facilitate the implementation of Article 21(5) of Law No. 36 of 2008.
The regulation sets out that all of the previously noted benefits, when paid out all at once, are to be taxed as income pursuant to the provisions of article 21 and these deductions are to be final. It is worth noting that this one-off payment can also be a series of payments over the period of two calendar years where each installment is taxed at the relevant applicable rate. Therefore, there is no benefit to the taxpayer in receiving one’s benefits spread out over several payments and over two calendar years.
For the purposes of taxation it does not matter whether the employee receives the payment directly or indirectly through a third party (such as a fund manager). However, if these payments were made over a period of time then the employee is deemed not to have received that payment for the purposes of taxation under these provisions. This is explained in the Elucidations to Article 3(3) of the regulation.
For severance pay, the regulation sets out the following rates:
(a)
0% on gross payments up to IDR 50 million;
(b)
5% on gross payments above IDR 50 million and up to IDR 100 million;
(c)
15% on gross payments above IDR 100 million and up to IDR 500 million; and
(d)
25% on gross payments of more than IDR 500 million.
For the other benefits noted in this regulation the rates are:
a.
0% on gross payments up to IDR 50 million; and
b.
5% on gross payments above IDR 50 million.
Examples of how these calculations are to be made are contained in Articles 4 and 5 of the elucidations to the regulation. Any payment above the tax-free threshold is calculated progressively within the specific rates for each amount. Therefore, a severance payment of IDR 175 million is to be taxed in the following way:
Article 21 Income Tax
0%
x IDR 50,000,000
=
IDR 0
5%
x IDR 50,000,000
=
IDR 2,500,000
15%
x IDR 75,000,000
=
IDR 11,250,000
Total
=
IDR 13,750,000
Any additional regulations required to clarify any matters relating to this Government Regulation will be by way of Minister of Finance regulations.
This regulation has been in force since 16 November 2009.
Ada Pertanyaan? Hubungi Kami 
Professional Solutions
University Solutions
Pro
My Workspace
Pro AI
Terfavorit
Allex QnA
Pro Compliance
