DGT: Income Tax Article 21 Effective Rate Scheme Under Evaluation

JAKARTA. The Directorate General of Taxes (DGT) is reportedly reviewing the implementation of the average effective rate (TER) scheme for calculating Income Tax Article (ITA) 21.

The announcement was made by the Director General of Taxes, Bimo Wijayanto, on Thursday (9/10) in Jakarta. “We are currently evaluating the TER,” Bimo said, as quoted by kontan.co.id.

The provision for calculating ITA 21 using the TER scheme is stipulated in the Minister of Finance Regulation (PMK) No. 168 of 2023. Under this scheme, the monthly income tax article 21 is no longer calculated using the progressive rate but based on the effective average rate.

The rate is determined by the amount of gross income and the taxpayer’s non-taxable income (PTKP) status, resulting in three TER categories:

• First, TER A applies to PTKP statuses of single with no dependents (TK/0), single with one dependent (TK/1), and married with no dependents (K/0).
• Second, TER B applies to PTKP statuses of TK/2 and K/1, as well as TK/3 and K/2.
• Third, TER C applies to PTKP status K/3.

Although the TER scheme simplifies monthly income tax article 21 calculations for the January–November tax periods, it has also raised new issues, especially when the amount of tax paid based on the TER exceeds the actual amount due.

This is because, in the final tax period, taxpayers must still calculate annual ITA 21 using the progressive rates under Article 17 of the Income Tax Law.

Nonetheless, it is also possible that the amount of ITA 21 paid from January to November is lower than the annual calculation for December. (ASP/KEN)