Income Tax Article 21 Incentive Officially Extended to Tourism Sector Workers

The government has finally issued the regulation on the expansion of the Government-Borne Income Tax Article (ITA) 21 facility to cover the tourism sector.

Previously, this tax incentive was limited to workers in specific sectors such as footwear, textiles and garments, furniture, and leather and leather products.

With this expansion, employees in the tourism sector will now also enjoy income tax exemption on earnings related to their employment. In other words, their take-home pay will remain intact, as no ITA 21 withholding will apply to their eligible income.

Under this scheme, the company pays the tax benefit directly to the employee, effectively increasing net income without reducing state revenue during the incentive period.

The expansion is stipulated in PMK No. 72 of 2025, which came into effect on October 28, 2025, the date it was enacted.

This regulation amends the previous policy, namely PMK No. 10 of 2025, and is aimed at supporting economic recovery and employment generation.

List of Industries Receiving ITA 21 Borne by the Government (DTP) Facility

In the regulation, the government also specifies the names of industries within each business sector that are eligible for the ITA 21 Borne by the Government (DTP) facility. The breakdown is as follows:

1. Industries in the footwear, textile and apparel, furniture, and leather and leather goods sectors.

2. Industries in the tourism sector.

Criteria for Employees Eligible for the Government-borne ITA 21 Incentive

The individuals who can benefit from this facility include certain permanent and certain non-permanent employees, under the following criteria:

1. Criteria for permanent employees:

• Must have a Tax Identification Number (TIN) or Population Identity Number (NIK) registered in the Directorate General of Taxes (DGT) system.
• Receive fixed or regular gross income of no more than IDR 10 million per month.

"Fixed or regular income" refers to salary, allowances, or similar compensation that is routinely received monthly.

2. Criteria for non-permanent employees:

• Must have a TIN or NIK registered with the DGT.
• Receive average wages of no more than IDR 500,000 per day or IDR 10 million per month.
• Must not be receiving any other ITA 21 DTP incentive at the same time.

Paid in Cash and Tax Withholding Slip Must Be Issued

The government-borne ITA 21 incentive is provided to employees in cash by the company or employer. The company is then required to issue a tax withholding slip for the payment.

Incentive Not Considered Taxable Income

As with the previous provision, the incentive received will not be considered a taxable object, even though it increases the employee’s income. However, companies are still required to issue a withholding slip for ITA 21.

Furthermore, if the ITA 21 borne by the government exceeds the actual ITA 21 payable, the excess is not refundable to the employee, except if the recipient of the government-borne ITA 21 facility works in the tourism sector, in which case the excess amount may be refunded.

Likewise, if a company utilizing the government-borne ITA 21 facility submits the ITA 21/26 Monthly Tax Return and results in an overpayment, the excess cannot be refunded or carried forward, unless the company operates in the tourism sector. In that case, the excess may be carried forward to the following tax period.

To carry it forward, companies in the tourism sector must prepare a working paper for the ITA 21 DTP calculation and submit it to the Directorate General of Taxes (DGT). In addition, the company must also report the additional withholding slip for the portion of tax borne by the government. (ASP/KEN)