DKI Jakarta's UMP Increases, Here's the Impact on Tax Revenue

Thursday, 23 November 2023

DKI Jakarta's UMP Increases, Here's the Impact on Tax Revenue

JAKARTA. The increase in DKI Jakarta's Provincial Minimum Wage (UMP) is estimated to not be enough to boost Income Tax Article (ITA) 21 payment, for several reasons.

Quoting, previously, the DKI Jakarta Provincial Government finally set the amount of UMP for 2024 at IDR 5,067,381 or an increase of 3.38% from the previous UMP amount of IDR 4,901,759.

The increase is not strong enough to enhance employee tax revenue because of the slight increase. In addition, both the old and new UMP are above the current Non-Taxable Income (PTKP) limit of IDR 4.5 million per month.

Executive Director of MUC Tax Research Institute Wahyu Nuryanto said the impact on ITA 21 revenue will be significant if the previous UMP below Non-Taxable Income becomes above Non-Tataxable Income. Thus, the change will create a new tax base.

Even so, Wahyu sees that the UMP increase has the potential to trigger an increase in the salaries of employees in DKI Jakarta. So that this can have an impact on increa the amount of Income Tax Article 21 revenue.

Meanwhile, citing, as of Tuesday (21/11), only 30 provinces have determined the amount of UMP in 2024.

The determination of the UMP refers to Government Regulation (PP) Number 51 of 2023 concerning Amendments to Government Regulation Number 36 of 2021 on wages.

With the change in the regulation, the UMP calculation formula is also changed, taking into account the current year's minimum wage plus the value of the minimum wage adjustment next year.

There are at least several variables that are taken into account. The first is the inflation rate, economic growth, a certain index set between the ranges of 0.10 to 0.30, and the current year's wages. (ASP/KEN)


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