Effective 1 January 2024, Regulation on the Use of Effective Rates of ITA 21 Released

Effective from 1 January 2024, the government ensures that the formula for calculating Income Tax Article (ITA) 21 can use the Effective Tax Rate (ETR), as stated in Government Regulation (PP) Number 58 of 2023.

The government mentioned that the use of ETR will make the calculation of income tax that must be withheld easier and simpler. 

However, the ETR formula is an alternative. This is because taxpayers can still choose to use the old method, as stated in Article 17 of the Income Tax Law (UU).

In general, the method for calculating ITA 21 with ETR is divided into two categories. First, the monthly ETR category is applied to income received by Individual Taxpayers in one tax period, except for the last tax period (December).

Second, the daily ETR category is applied to income received by Non-Permanent Employees on a daily, weekly, unit, or piece rate basis.

1.    Monthly ETR

The calculation of ITA 21 in the Monthly ETR is categorized based on the amount of the Taxpayer's Non-Taxable Income (PTKP) at the beginning of the tax year. There are three categories in the Monthly ETR, the following are:

Category*)	Non-Taxable Income
Monthly ETR Category A	TK (Not Married)/0 (54 million) TK/1 & K (Married)/0 (58,5 million
Monthly ETR Category B	TK/2 & K/1 (63 million) TK/3 & K/2 (67,5 million)
Monthly ETR Category C	K/3 (72 million)

Based on this categorization, the ETR amount is then determined according to the monthly gross income received by the taxpayer, as stated in the attachment to PP 58 of 2023:

Calculation of Monthly ETR of ITA 21

By referring to the monthly TER list listed in the attachment to Government Regulation No. 58 Year 2023, taxpayers can determine the amount of income tax payable for the period starting from the January-November tax period and income tax payable for the December period.

Description	Income Tax Article 21
ITA 21 per Period (Jan-Nov)	Monthly Gross Income x Monthly ETR
ITA 21 for the December period	ITA 21 for a Year (Yearly Gross Income - Position/Pension Allowances - Pension Contributions - Zakat/Mandatory Religious Contributions paid by the employer - Non-Taxable Income) x Rate of Article 17 of the Income Tax Law
	ITA 21 for the December period ITA 21 for a year - ITA 21 Period Jan-Nov (11 periods)

2.    Daily ETR

Calculating income tax payable based on Daily ETR is relatively simpler because there are only two types of rates grouped into two categories of income amount, as follows:

Daily Gross Income (IDR)	ETR ITA 21	Income Tax Payable
≤ 450.000	0%	0% X Daily gross
> 450.000 s.d.2.500.000	0,5%	0,5% X Daily gross