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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Fitri N. Heriani
Minister of FInance, Mr. Bambang Brodjonegoro. Photo by: RES.
The government has officially increased the country’s non-taxable income thresholds for the 2016 fiscal year by 50%. The increases were agreed upon by the House of Representatives (House) and the Minister of Finance (Minister) at an official working meeting (rapat kerja) which was held on April 2016. Thus, both corporate and individual taxpayers can now recalculate the amount of income tax which must be paid for the 2016 fiscal year and for upcoming fiscal years. These increases will also apply retroactively from January 2016.
The new non-taxable income thresholds are now set at IDR 54 million per year (approximately IDR 4.5 million per month) for taxpayers who fall into the unmarried category (and who are referred to as “TK/0” taxpayers); IDR 58.5 million per year for taxpayers who fall into the married without dependents/children category (K/0); IDR 63 million per year for taxpayers who fall into the married with one dependent/child category (K/1); IDR 67.5 million per year for taxpayers who fall into the married with two dependents/children category; and IDR 72 million per year for taxpayers who fall into the married with three dependents/children (K/3) category.
Double-income families will also be able to enjoy new non-taxable income thresholds. Specifically, taxpayers who have joint incomes from both spouses and who have no children (“K/I/0” taxpayers) will have their threshold set at IDR 112.5 million per year, while taxpayers who enjoy a joint income from both spouses and who have one child (“K/I/1” taxpayers) will have to observe a threshold of IDR 117 million per year. Meanwhile, taxpayers who enjoy a joint income from both spouses and who have two children (“K/I/2” taxpayers) will have their threshold set at IDR 121.5 million per year. And finally, taxpayers with a joint income from both spouses and who have three children (“K/I/3” taxpayers) will have their threshold set at IDR 126 million per year.
In addition, Bambang Brodjonegoro, the Minister of Finance, has also announced that the increases are being supported by a proper regulatory framework.
“I have already signed a Ministerial Regulation which will come into effective force starting from the 2016 fiscal year,” asserted Minister Brodjonegoro during a press conference which was held in Jakarta on Wednesday, 22 June 2016.
During the press conference, Minister Brodjonegoro also explained the underlying reasoning behind the government’s decision to readjust the non-taxable income thresholds. Firstly, Indonesia’s economic growth has been slowing since 2013, and only achieved a growth rate of 4.9% during the first quarter of this year. This has mainly been caused by the declining performance of important trading partners such as the United States and China.
Indonesia's current economic growth rate lags behind the government’s 5.2% growth target, which was incorporated into the 2016 Draft State Budget (Rancangan Anggaran Pendapatan dan Belanja Negara 2016 – RAPBN 2016). In order to accelerate the realization of the government’s target, it is hoped that the threshold increases will ultimately stabilize and improve the general public’s purchasing power.
Secondly, the non-taxable income threshold is closely related to the provincial minimum wage (Upah Minimum Provinsi - UMP) and the city/regency minimum wage (Upah Minimum Kabupaten/Kota - UMK), which are calculated according to the country’s Decent Living Standards Index (Komponen Hidup Layak - KHL). Therefore, UMP/UMK can serve as an indicator for any increases made to the non-taxable income threshold.
At present, 2016 UMPs range from between IDR 17.1 million per year in East Nusa Tenggara province to IDR 37.2 million per year in Jakarta. Meanwhile, several provinces do not determine any UMP and instead specify UMKs for each of the cities or regencies under their control. Nonetheless, almost all regions across the country have readjusted their UMPs/UMKs during the course of the last few years. On average, UMPs in 2016 have increased by some 11.95% over those of the previous year. By way of example, Minister Brodjonegoro pointed to the regency of Karawang with its UMK of IDR 39.6 million per year, currently the highest UMK in the country. Indeed, this UMK already exceeds the existing non-taxable income threshold for individual taxpayers.
Thirdly, the increase in the non-taxable income threshold is also founded upon Statistics Indonesia (Badan Pusat Statistik) data which shows that the country’s average taxpayer belongs to a two-child family (i.e. a K/I/2 classification taxpayer). This means that the average non-taxable income threshold for Indonesian families amounts to IDR 67.5 million per year.
And finally, the increase in the non-taxable income threshold should also serve as a taxation stimulus, which should in turn eventually boost consumption and economic conditions in general throughout the country. By way of example, the increase in the non-taxable income threshold will reduce the amount of taxable income (penghasilan kena pajak), which will ultimately lead to a reduction in the level of individual income tax generated when compared to the projection prior to the readjustment. However, this reduction will be compensated for by a concomitant increase in revenues raised through value added taxes, luxury goods sales taxes, and corporate income taxes, due to the increase in the tax base for these three types of taxes.
Minister Brodjonegoro acknowledged the potential loss in taxes which would occur as a result of the increases made to the country’s non-taxable income thresholds. However, the Minister expressed his firm belief that this policy would ultimately have a positive impact on the country’s macroeconomic outlook. This is because the adjustments made to the rates of non-taxable income would ultimately lead to an increase in the general public’s purchasing power and levels of disposable income (pendapatan siap belanja). This in turn should ultimately lead to an increase in the level of aggregate demand in the form of household consumption and investment. In conclusion, Minister Brodjonegoro expressed his hope that the new policy would lead to an increase in employment and also reduce levels of unemployment and poverty within Indonesia.
The new non-taxable income thresholds are now set at IDR 54 million per year (approximately IDR 4.5 million per month) for taxpayers who fall into the unmarried category (and who are referred to as “TK/0” taxpayers); IDR 58.5 million per year for taxpayers who fall into the married without dependents/children category (K/0); IDR 63 million per year for taxpayers who fall into the married with one dependent/child category (K/1); IDR 67.5 million per year for taxpayers who fall into the married with two dependents/children category; and IDR 72 million per year for taxpayers who fall into the married with three dependents/children (K/3) category.
Double-income families will also be able to enjoy new non-taxable income thresholds. Specifically, taxpayers who have joint incomes from both spouses and who have no children (“K/I/0” taxpayers) will have their threshold set at IDR 112.5 million per year, while taxpayers who enjoy a joint income from both spouses and who have one child (“K/I/1” taxpayers) will have to observe a threshold of IDR 117 million per year. Meanwhile, taxpayers who enjoy a joint income from both spouses and who have two children (“K/I/2” taxpayers) will have their threshold set at IDR 121.5 million per year. And finally, taxpayers with a joint income from both spouses and who have three children (“K/I/3” taxpayers) will have their threshold set at IDR 126 million per year.
In addition, Bambang Brodjonegoro, the Minister of Finance, has also announced that the increases are being supported by a proper regulatory framework.
“I have already signed a Ministerial Regulation which will come into effective force starting from the 2016 fiscal year,” asserted Minister Brodjonegoro during a press conference which was held in Jakarta on Wednesday, 22 June 2016.
During the press conference, Minister Brodjonegoro also explained the underlying reasoning behind the government’s decision to readjust the non-taxable income thresholds. Firstly, Indonesia’s economic growth has been slowing since 2013, and only achieved a growth rate of 4.9% during the first quarter of this year. This has mainly been caused by the declining performance of important trading partners such as the United States and China.
Indonesia's current economic growth rate lags behind the government’s 5.2% growth target, which was incorporated into the 2016 Draft State Budget (Rancangan Anggaran Pendapatan dan Belanja Negara 2016 – RAPBN 2016). In order to accelerate the realization of the government’s target, it is hoped that the threshold increases will ultimately stabilize and improve the general public’s purchasing power.
Secondly, the non-taxable income threshold is closely related to the provincial minimum wage (Upah Minimum Provinsi - UMP) and the city/regency minimum wage (Upah Minimum Kabupaten/Kota - UMK), which are calculated according to the country’s Decent Living Standards Index (Komponen Hidup Layak - KHL). Therefore, UMP/UMK can serve as an indicator for any increases made to the non-taxable income threshold.
At present, 2016 UMPs range from between IDR 17.1 million per year in East Nusa Tenggara province to IDR 37.2 million per year in Jakarta. Meanwhile, several provinces do not determine any UMP and instead specify UMKs for each of the cities or regencies under their control. Nonetheless, almost all regions across the country have readjusted their UMPs/UMKs during the course of the last few years. On average, UMPs in 2016 have increased by some 11.95% over those of the previous year. By way of example, Minister Brodjonegoro pointed to the regency of Karawang with its UMK of IDR 39.6 million per year, currently the highest UMK in the country. Indeed, this UMK already exceeds the existing non-taxable income threshold for individual taxpayers.
Thirdly, the increase in the non-taxable income threshold is also founded upon Statistics Indonesia (Badan Pusat Statistik) data which shows that the country’s average taxpayer belongs to a two-child family (i.e. a K/I/2 classification taxpayer). This means that the average non-taxable income threshold for Indonesian families amounts to IDR 67.5 million per year.
And finally, the increase in the non-taxable income threshold should also serve as a taxation stimulus, which should in turn eventually boost consumption and economic conditions in general throughout the country. By way of example, the increase in the non-taxable income threshold will reduce the amount of taxable income (penghasilan kena pajak), which will ultimately lead to a reduction in the level of individual income tax generated when compared to the projection prior to the readjustment. However, this reduction will be compensated for by a concomitant increase in revenues raised through value added taxes, luxury goods sales taxes, and corporate income taxes, due to the increase in the tax base for these three types of taxes.
Minister Brodjonegoro acknowledged the potential loss in taxes which would occur as a result of the increases made to the country’s non-taxable income thresholds. However, the Minister expressed his firm belief that this policy would ultimately have a positive impact on the country’s macroeconomic outlook. This is because the adjustments made to the rates of non-taxable income would ultimately lead to an increase in the general public’s purchasing power and levels of disposable income (pendapatan siap belanja). This in turn should ultimately lead to an increase in the level of aggregate demand in the form of household consumption and investment. In conclusion, Minister Brodjonegoro expressed his hope that the new policy would lead to an increase in employment and also reduce levels of unemployment and poverty within Indonesia.
(hs/sp)
Marcell Sihombing, Fitri N. Heriani
Minister of FInance, Mr. Bambang Brodjonegoro. Photo by: RES.
The government has officially increased the country’s non-taxable income thresholds for the 2016 fiscal year by 50%. The increases were agreed upon by the House of Representatives (House) and the Minister of Finance (Minister) at an official working meeting (rapat kerja) which was held on April 2016. Thus, both corporate and individual taxpayers can now recalculate the amount of income tax which must be paid for the 2016 fiscal year and for upcoming fiscal years. These increases will also apply retroactively from January 2016.
The new non-taxable income thresholds are now set at IDR 54 million per year (approximately IDR 4.5 million per month) for taxpayers who fall into the unmarried category (and who are referred to as “TK/0” taxpayers); IDR 58.5 million per year for taxpayers who fall into the married without dependents/children category (K/0); IDR 63 million per year for taxpayers who fall into the married with one dependent/child category (K/1); IDR 67.5 million per year for taxpayers who fall into the married with two dependents/children category; and IDR 72 million per year for taxpayers who fall into the married with three dependents/children (K/3) category.
Double-income families will also be able to enjoy new non-taxable income thresholds. Specifically, taxpayers who have joint incomes from both spouses and who have no children (“K/I/0” taxpayers) will have their threshold set at IDR 112.5 million per year, while taxpayers who enjoy a joint income from both spouses and who have one child (“K/I/1” taxpayers) will have to observe a threshold of IDR 117 million per year. Meanwhile, taxpayers who enjoy a joint income from both spouses and who have two children (“K/I/2” taxpayers) will have their threshold set at IDR 121.5 million per year. And finally, taxpayers with a joint income from both spouses and who have three children (“K/I/3” taxpayers) will have their threshold set at IDR 126 million per year.
In addition, Bambang Brodjonegoro, the Minister of Finance, has also announced that the increases are being supported by a proper regulatory framework.
“I have already signed a Ministerial Regulation which will come into effective force starting from the 2016 fiscal year,” asserted Minister Brodjonegoro during a press conference which was held in Jakarta on Wednesday, 22 June 2016.
During the press conference, Minister Brodjonegoro also explained the underlying reasoning behind the government’s decision to readjust the non-taxable income thresholds. Firstly, Indonesia’s economic growth has been slowing since 2013, and only achieved a growth rate of 4.9% during the first quarter of this year. This has mainly been caused by the declining performance of important trading partners such as the United States and China.
Indonesia's current economic growth rate lags behind the government’s 5.2% growth target, which was incorporated into the 2016 Draft State Budget (Rancangan Anggaran Pendapatan dan Belanja Negara 2016 – RAPBN 2016). In order to accelerate the realization of the government’s target, it is hoped that the threshold increases will ultimately stabilize and improve the general public’s purchasing power.
Secondly, the non-taxable income threshold is closely related to the provincial minimum wage (Upah Minimum Provinsi - UMP) and the city/regency minimum wage (Upah Minimum Kabupaten/Kota - UMK), which are calculated according to the country’s Decent Living Standards Index (Komponen Hidup Layak - KHL). Therefore, UMP/UMK can serve as an indicator for any increases made to the non-taxable income threshold.
At present, 2016 UMPs range from between IDR 17.1 million per year in East Nusa Tenggara province to IDR 37.2 million per year in Jakarta. Meanwhile, several provinces do not determine any UMP and instead specify UMKs for each of the cities or regencies under their control. Nonetheless, almost all regions across the country have readjusted their UMPs/UMKs during the course of the last few years. On average, UMPs in 2016 have increased by some 11.95% over those of the previous year. By way of example, Minister Brodjonegoro pointed to the regency of Karawang with its UMK of IDR 39.6 million per year, currently the highest UMK in the country. Indeed, this UMK already exceeds the existing non-taxable income threshold for individual taxpayers.
Thirdly, the increase in the non-taxable income threshold is also founded upon Statistics Indonesia (Badan Pusat Statistik) data which shows that the country’s average taxpayer belongs to a two-child family (i.e. a K/I/2 classification taxpayer). This means that the average non-taxable income threshold for Indonesian families amounts to IDR 67.5 million per year.
And finally, the increase in the non-taxable income threshold should also serve as a taxation stimulus, which should in turn eventually boost consumption and economic conditions in general throughout the country. By way of example, the increase in the non-taxable income threshold will reduce the amount of taxable income (penghasilan kena pajak), which will ultimately lead to a reduction in the level of individual income tax generated when compared to the projection prior to the readjustment. However, this reduction will be compensated for by a concomitant increase in revenues raised through value added taxes, luxury goods sales taxes, and corporate income taxes, due to the increase in the tax base for these three types of taxes.
Minister Brodjonegoro acknowledged the potential loss in taxes which would occur as a result of the increases made to the country’s non-taxable income thresholds. However, the Minister expressed his firm belief that this policy would ultimately have a positive impact on the country’s macroeconomic outlook. This is because the adjustments made to the rates of non-taxable income would ultimately lead to an increase in the general public’s purchasing power and levels of disposable income (pendapatan siap belanja). This in turn should ultimately lead to an increase in the level of aggregate demand in the form of household consumption and investment. In conclusion, Minister Brodjonegoro expressed his hope that the new policy would lead to an increase in employment and also reduce levels of unemployment and poverty within Indonesia.
The new non-taxable income thresholds are now set at IDR 54 million per year (approximately IDR 4.5 million per month) for taxpayers who fall into the unmarried category (and who are referred to as “TK/0” taxpayers); IDR 58.5 million per year for taxpayers who fall into the married without dependents/children category (K/0); IDR 63 million per year for taxpayers who fall into the married with one dependent/child category (K/1); IDR 67.5 million per year for taxpayers who fall into the married with two dependents/children category; and IDR 72 million per year for taxpayers who fall into the married with three dependents/children (K/3) category.
Double-income families will also be able to enjoy new non-taxable income thresholds. Specifically, taxpayers who have joint incomes from both spouses and who have no children (“K/I/0” taxpayers) will have their threshold set at IDR 112.5 million per year, while taxpayers who enjoy a joint income from both spouses and who have one child (“K/I/1” taxpayers) will have to observe a threshold of IDR 117 million per year. Meanwhile, taxpayers who enjoy a joint income from both spouses and who have two children (“K/I/2” taxpayers) will have their threshold set at IDR 121.5 million per year. And finally, taxpayers with a joint income from both spouses and who have three children (“K/I/3” taxpayers) will have their threshold set at IDR 126 million per year.
In addition, Bambang Brodjonegoro, the Minister of Finance, has also announced that the increases are being supported by a proper regulatory framework.
“I have already signed a Ministerial Regulation which will come into effective force starting from the 2016 fiscal year,” asserted Minister Brodjonegoro during a press conference which was held in Jakarta on Wednesday, 22 June 2016.
During the press conference, Minister Brodjonegoro also explained the underlying reasoning behind the government’s decision to readjust the non-taxable income thresholds. Firstly, Indonesia’s economic growth has been slowing since 2013, and only achieved a growth rate of 4.9% during the first quarter of this year. This has mainly been caused by the declining performance of important trading partners such as the United States and China.
Indonesia's current economic growth rate lags behind the government’s 5.2% growth target, which was incorporated into the 2016 Draft State Budget (Rancangan Anggaran Pendapatan dan Belanja Negara 2016 – RAPBN 2016). In order to accelerate the realization of the government’s target, it is hoped that the threshold increases will ultimately stabilize and improve the general public’s purchasing power.
Secondly, the non-taxable income threshold is closely related to the provincial minimum wage (Upah Minimum Provinsi - UMP) and the city/regency minimum wage (Upah Minimum Kabupaten/Kota - UMK), which are calculated according to the country’s Decent Living Standards Index (Komponen Hidup Layak - KHL). Therefore, UMP/UMK can serve as an indicator for any increases made to the non-taxable income threshold.
At present, 2016 UMPs range from between IDR 17.1 million per year in East Nusa Tenggara province to IDR 37.2 million per year in Jakarta. Meanwhile, several provinces do not determine any UMP and instead specify UMKs for each of the cities or regencies under their control. Nonetheless, almost all regions across the country have readjusted their UMPs/UMKs during the course of the last few years. On average, UMPs in 2016 have increased by some 11.95% over those of the previous year. By way of example, Minister Brodjonegoro pointed to the regency of Karawang with its UMK of IDR 39.6 million per year, currently the highest UMK in the country. Indeed, this UMK already exceeds the existing non-taxable income threshold for individual taxpayers.
Thirdly, the increase in the non-taxable income threshold is also founded upon Statistics Indonesia (Badan Pusat Statistik) data which shows that the country’s average taxpayer belongs to a two-child family (i.e. a K/I/2 classification taxpayer). This means that the average non-taxable income threshold for Indonesian families amounts to IDR 67.5 million per year.
And finally, the increase in the non-taxable income threshold should also serve as a taxation stimulus, which should in turn eventually boost consumption and economic conditions in general throughout the country. By way of example, the increase in the non-taxable income threshold will reduce the amount of taxable income (penghasilan kena pajak), which will ultimately lead to a reduction in the level of individual income tax generated when compared to the projection prior to the readjustment. However, this reduction will be compensated for by a concomitant increase in revenues raised through value added taxes, luxury goods sales taxes, and corporate income taxes, due to the increase in the tax base for these three types of taxes.
Minister Brodjonegoro acknowledged the potential loss in taxes which would occur as a result of the increases made to the country’s non-taxable income thresholds. However, the Minister expressed his firm belief that this policy would ultimately have a positive impact on the country’s macroeconomic outlook. This is because the adjustments made to the rates of non-taxable income would ultimately lead to an increase in the general public’s purchasing power and levels of disposable income (pendapatan siap belanja). This in turn should ultimately lead to an increase in the level of aggregate demand in the form of household consumption and investment. In conclusion, Minister Brodjonegoro expressed his hope that the new policy would lead to an increase in employment and also reduce levels of unemployment and poverty within Indonesia.
(hs/sp)