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With an IDR 5 Million Per Month Income Will You Have to Pay Taxes? Check the Tax Law!
People who make the Provincial Minimum Wage (UMP) or less are protected, whereas people with larger incomes must contribute more.

With an IDR 5 Million Per Month Income Will You Have to Pay Taxes? Check the Tax Law!

January 2023

The taxation of a five million rupiah wage is the subject of much debate. Basically, people who earn up to IDR 5 million a month no longer have to pay taxes as a result of adjustments to Indonesia’s tax rates.

Within the Tax Harmonization Law, there have been changes to the income tax rates (PPh) and tiers (UU HPP). At a fixed rate of 5%, the lowest tier has been raised to IDR 60 million, from IDR 50 million previously.

People who make the Provincial Minimum Wage (UMP) or less are protected, whereas people with larger incomes must contribute more.

Old Policy Table: Based on the Current Income Tax Law

Order of Annual Taxable Income

Rate

Up to IDR 50 Mio

5%

> IDR 50 Mio — IDR 250 Mio

15%

> IDR 250 Mio — IDR 500 Mio

25%

> IDR 500 Mio

30%


Based on HPP Law: NEW

Order of Annual Taxable Income

Rate

Up to IDR 60 Mio*

5%

> IDR 60 Mio — IDR 250 Mio

15%

> IDR 250 Mio — IDR 500 Mio

25%

> IDR 500 Mio — IDR 5 Billion*

30%

> IDR 5 Billion*

35%

*NEW
 

Here Is a Straightforward Example of How to Calculate Income Tax at Different Income Levels:

TABLE 1

Monthly  Gross Income 

IDR 4,5 Mio

IDR 5 Mio

Annual Income (x12)

IDR 54 Mio

IDR 60 Mio

PTKP* (TK/O)

IDR (54 Mio)*

IDR (54 Mio)*

Taxable income

0

IDR 6 Mio

 

Previously
(UU PPh)

Updated
(UU HPP)

Previously

(UU PPh)

Updated (UU HPP)

Layer Rates I


—


—

%5 X IDR 6 Mio
IDR 300 K

%5 X IDR 6 Mio
IDR 300 K

Layer Rates II

—

—

—

—

Total Taxes Payable

0

0

IDR 300 K

IDR 300 K

* The computation is predicated on the premise that the taxpayer is unmarried and has no dependents.

** Fixed

 

TABLE 2

Monthly Net Income 

IDR 9 Mio

IDR 10 Mio

Annual Income (x12)

IDR 108 Mio

IDR 120 Mio

PTKP* (TK/O)

IDR (54 Mio)*

IDR (54 Mio)*

Taxable income

IDR 54 Mio

IDR 66 Mio

 

Previously
(UU PPh)

Updated
(UU HPP)

Previously (UU PPh)

Updated (UU HPP)

Layer Rates I

%5 X IDR 50 Mio
IDR 2,5 Mio

%5 X IDR 54 Mio
IDR 2,7 Mio

%5 X IDR 50 Mio
IDR 2,5 Mio

%5 X IDR 60 Mio
IDR 3 Mio

Layer Rates II

%15 X IDR 4 Juta
IDR 600 K


—

%15 X IDR 16 Mio
IDR 2,4 Mio

%15 X IDR 6 Mio
IDR 900 K

Total Taxes Payable

IDR 31 Mio

IDR 2,7 Mio**

IDR 4,9 Mio

IDR 3,9 Mio**

* The computation is predicated on the premise that the taxpayer is unmarried and has no dependents.
** Drop

This simple illustration shows that the new taxable income rate is less for lower middle-class workers, including an exemption from paying income tax for those making less than 60 million per year.

Make it easy on yourself. Let Moores Rowland Indonesia’s tax services provide you with all the details regarding Indonesia’s taxes and tax system when investing in Indonesia. Email us at: contact-Jakarta@moores-rowland.com or contact-Bali@moores-rowland.com for more information.

**By: Stefani W. Anggraeni — Marketing Communications & Social Media Specialist