Considered To Be Ineffective, ITA 21 DTP Incentive Will Be Replaced by Cash Transfer

JAKARTA. The government is considering changing the Income Tax Article (ITA) 21 borne by the government (DTP) incentive scheme by providing direct cash assistance or cash transfer to the public. This is due to the lack of taxpayers who use the facility during a Corona Virus Disease 2019 (Covid-19) pandemic struck.

Quoting bisnis.com, the change in the concept of incentive is done so that assistance can be channeled more effectively to the community. As for this ITA 21 DTP facility has been provided to employees who work in companies engaged in certain sectors. The business sectors that have been appointed by the government as recipients of this facility are 1,089 certain industrial sectors (KLU).

In addition, this facility is also given to employees who work in companies receiving Import Facility of for Export Purpose (KITE) and companies located in Bonded Zone. However, there are some conditions that must be met so that employees can use the facilities, including having an income of not more than IDR 200 million a year and have a Tax Id Number (NPWP).

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With this facility, eligible employees will not be deducted from ITA 21 when receiving a monthly salary payment. So it is expected to increase the employee's economic capability.

Based on government data, until 22 July, 2020 ITA 21 DTP facility that has been used is only worth IDR 16.2 trillion. This amount is equivalent to 13.34% of the allocation provided by the government, which is IDR 120.61 trillion. In fact, this policy has been issued since April 2020, or it has been four months ago.

Technical Problem

The government revealed that the lack of use of the ITA 21 DTP due to technical problems, which is related to administration. Therefore, in addition to considering options for changing the aid mechanism, it will also evaluate whether it is necessary to simplify the distribution mechanism.

Read: Here is The Procedure for Reporting Government-Borne Tax Incentive

Quoting cnbcindonesia.com, the government hopes that the obstacles that occur can be handled immediately.  So that the people who are entitled to receive assistance can use it.

According to the government, this facility is aimed at middle class people who are still working. Based on government data, during the Covid-19 pandemic, the number of termination of employment (PHK) in the middle class was not very high.