PPh Exemptions for Income in the Form of In-Kind Benefits and/or Incentives Introduced

In an effort to ensure greater legal certainty and fairness as regards the imposition of income taxes (pajak penghasilan – “PPh”) on incomes deriving from work- or service-related reimbursement costs or rewards in the forms of in-kind benefits (natura) and/or incentives, the Minister of Finance (“Minister”) has issued Regulation No. 66 of 2023 (“Regulation 66/2023”) on the Imposition of PPh on Incomes Deriving from Work- or Service-Related Reimbursement Costs or Rewards Received or Obtained in the Forms of in-Kind Benefits and/or Incentives (“Benefit and/or Incentive Incomes”),[1] which has been in force since 1 July 2023. Through the promulgation of Regulation 66/2023, the previous legal framework that addressed Benefit and/or Incentive Incomes, specifically Regulation of the Minister No. 167/PMK.03/2018 of 2018 (“Regulation 167/2018”), has now been repealed and replaced.[2]