Minister of Finance Again Frees Income Tax for Employees

Minister of Finance Again Frees Income Tax for Employees - The Minister of Finance (Menkeu), Sri Mulyani, emphasized that she would continue the tax incentive policy in the form of employee tax exemptions.

This policy is part of the 2021 national economic recovery program (PEN), especially for people affected by the Covid-19 pandemic. He explained that the employee tax exemption or income tax (PPh) Article 21 uses the government-borne mechanism (DTP).

The stipulation is that this tax exemption is for employees with gross income below IDR 200 million per year according to the classification. This has also been regulated in the Minister of Finance Regulation (PMK).

"The goal is to encourage purchasing power, to fulfill imports of production raw materials for sectors that are still affected by the Covid-19 pandemic, to help the company's cash flow to return to business activities," explained Sri Mulyani.

"For our fiscal incentive policy, we will encourage economic growth and business activities by providing tax incentives to improve and support the improvement of a conducive investment climate," he said.

This tax exemption is for employees with gross income below IDR 200 million per year. In addition, there is also relief from corporate tax installments or PPh 25 for corporations. However, Sri Mulyani did not give the amount of relief given.

Previously, the government had stated that it would bear Income Tax or PPh article 21 or employee salary tax in March 2020. This step is part of the policy stimulus package carried out by the government to reduce the impact of the corona virus on the economic slowdown.

Thus, employees who have a NPWP and a regular and regular annualized gross income of no more than Rp 200 million in these sectors will get additional income in the form of taxes that are not deducted by the employer but are given in cash to employees.

Meanwhile, employers who receive this facility are required to submit a monthly report on the realization of Income Tax Article 21 DTP.

The employee tax exemption policy applies to companies operating in one of 1,062 certain industrial fields, to companies that have easy import facilities for export purposes (KITE), and to companies in bonded zones.

Through this policy, the income received by employees increases than usual. Because the income is not deducted by the employer. The incentives were welcomed by entrepreneurs. The Directorate General of Taxes (DGT) noted that there were 12,062 companies that applied for employee tax relief in April 2020.

However, of this number, only 9,610 companies were approved to get relief in paying income tax article 21, while the remaining 2,452 were rejected.

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