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Sri Mulyani Claims the Wave of Startup Layoffs Has an Impact on Taxes

Thursday, 24 November 2022

Sri Mulyani Claims the Wave of Startup Layoffs Has an Impact on Taxes

JAKARTA. The high wave of layoffs that occurred in numerous startup companies was determined to be correlated with tax revenue, according to Minister of Finance Sri Mulyani Indrawati.

Especially, when viewed from the data on the realization of Income Tax Article (ITA) 21 or taxes on employee's income, during January-October 2022 which grew 21% compared to the same period in 2021 or on a year-on-year (YoY) basis.

Read: Bubble Burst Triggers Massive Layoffs, What Happens to Startup Workers?

When compared to the previous month, the realization of ITA 21 revenue in October, or on a month-to-month (mom) basis, increased by 20%.

The contribution of ITA 21 revenue to overall tax revenue up until the end of October, which totaled IDR 1,448.2 trillion, was 9.9%. "It's a bit awkward if we compare (the realization of the ITA 21 revenue) with some news related to layoffs," said Sri Mulyani, Thursday (11/24).

This is because when a company conducts layoffs it must be accompanied by severance pay which is the object of ITA 21, in addition to salaries, wages and other income received by employees from employers.

Despite contributing to ITA 21 revenue, Sri Mulyani admitted that she would be wary of the high wave of startup layoffs. In fact, if necessary, the government will formulate appropriate policies to respond to this issue.

"We must respond to it, in the context of whether there are changes that we have to review and be aware of, to formulate appropriate policies and responses, concluded Sri Mulyani.



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