PMK 66 / 2023

Government Regulation Number 55 of 2022 has emphasized that the provision of compensation in kind and/or benefits is a cost that can be deducted from gross income to determine taxable income for employers as long as the gift meets the cost requirements (Obtain, Collect and Maintain income).

For job recipients, in principle, the provision of benefits in kind is an income tax object. Even so, there are several exceptions to the benefits in kind from the imposition of Income Tax objects.

Minister of Finance Regulation No. 66 of 2023 further regulates the limitations on benefit in kind that are excluded from Income Tax objects and procedures for assessing/calculating Income Tax objects, as follows:

1. FOOD, FOOD MATERIALS, DRINK INGREDIENTS, AND/OR DRINKS FOR ALL EMPLOYEES

BIK’s in the form of coupons/reimbursement with a maximum of Rp. 2,000,000 (two million rupiah) for each employee within 1 (one) month. for each employee within 1 (one) month.

2. BENEFIT IN KIND PROVIDED IN CERTAIN AREA

Determination regarding “Certain Areas” is stipulated by the Decree General of Taxes.

3. BENEFIT IN KIND THAT MUST BE PROVIDED BY THE EMPLOYER IN THE WORK PERFORMANCE

4. BENEFIT IN KIND WHICH SOURCES OR IS FINANCED IN THE STATE REVENUE AND EXPENDITURES BUDGET, AND/OR VILLAGE EXPENDITURE REVENUE BUDGET

5. BENEFIT IN KIND WITH CERTAIN TYPES AND LIMITATIONS (see attachment for details)

PROCEDURE FOR IMPOSING BENEFITIN KIND CHARGES FOR EMPLOYERS

Expenditures for benefit in kind with a useful life of more than 1 year are charged through depreciation/ amortization.
Expenditures for benefit in kind that have a useful life of less than 1 year are expensed in the year the expenditure is incurred.

INCOME TAX OBJECT APPRAISAL PROCEDURES

Market Value: for reimbursement or compensation in kind.
Total costs incurred by the employer: for reimbursement or compensation in the form of enjoyment.

PERIOD OF APPLICATION OF THE MINISTER OF FINANCE REGULATION NO. 66/2023

Minister of Finance Regulation No. 66/2023 comes into effect July 1, 2023 whereby employers are required to start deducting Income Tax Article 21 for granting benefit in kind exceeding the value limit:

Granting benefit in kind for 2022 is exempted from tax objects for employees/beneficiaries.
Provision of benefit in kind for the period January – June 2023 which is a tax object for employees, must be calculated and paid for themselves and reported by the employee in the Fiscal Year 2023 Annual Income Tax Return.

DETAILS OF BENEFIT IN KIND WITH CERTAIN TYPES AND LIMITATIONS

No	Types of Benefit in kind	Limitations
1	Gifts from employers include food ingredients, beverage ingredients, food and/or drinks for religious holidays including Eid al-Fitr, Christmas, Nyepi, Vesak, or Chinese New Year.	• Received or obtained by all employees
2	Gifts from employers that are given other than in the context of religious holidays as referred to in number 1.	• Received or obtained by employees; and • The total value of no more than IDR 3,000,000.00 (three million rupiah) for each Employee within 1 (one) Financial Year
3	Work equipment and facilities from employers include computers, laptops or cellular phones along with their supporting facilities such as phone credit or internet connection.	• Received or obtained by employees; and • Support the work of Employees.
4	Health and medical service facilities from the employer.	• Received or obtained by employees; and • Given in order to handle • Work related accident • Work related sickness • Life-saving emergency; or • Follow-up care and treatment as a result of work-related illnesses
5	Sports facilities from the employer other than sports facilities for golf, horse racing, motorized boat racing, gliding, and/or automotive sports.	• Received or obtained by employees. • Total value of no more than IDR 1,500,000.00 (one million five hundred thousand rupiah) for each employee within 1 (one) tax year.
6	Residential facilities from employers that are communal (used together) include dormitories, dormitories, hostels, or barracks.	• Received or obtained by employees.
7	Residential facilities from employers whose utilization rights are held by individuals, including apartments or landed houses.	• Received or obtained by employees. • Total value of no more than IDR 2,000,000.00 (two million rupiah) for each employee within 1 (one) month.
8	Vehicle facilities from the employer	• Received or obtained by employees. a. Does not have equity participation in the employer; And b. Have an average gross income in the last 12 (twelve) months up to Rp. 100,000,000.00 (one hundred million rupiah) per month from the employer.
9	Contribution facilities to pension funds whose establishment has been approved by the Financial Services Authority are borne by the donor.	• Received or obtained by employees.
10	Religious facilities include prayer rooms, mosques, chapels or temples.	• Intended solely for worship activities.
11	All in-kind and/or enjoyment received or obtained during 2022	• Received or obtained by employees or service providers.

The difference between the value of Benefit in kind received minus the limit in the form of a certain value above is the object of Income Tax withholding.

PDF : PMK 66 / 2023