TER (Effective Average Rate)
TER (Tarif Efektif Rata-rata / Effective Average Rate) is the method for calculating PPh Article 21 withholding effective January 1, 2024 under Ministry of Finance Regulation No. 168/PMK.03/2023. TER replaces the more complex monthly progressive rate method with a simpler, more transparent calculation. There are two types of TER: (1) Monthly TER, used for January through November of each year, (2) Annual TER (using Article 17 para. 1 rate), used for December as the final tax settlement for the year. TER is divided into three categories based on the taxpayer's PTKP (non-taxable income) status: Category A: Single with TK/0, TK/1, or Married K/0 (basic/entry status), Category B: TK/2, TK/3, Married K/1, or K/2 (intermediate status), Category C: Married K/3 (highest status). The complete TER table with detailed rates for each income range is in the Annex to PMK 168/2023. Each month, withholding agents use this table to calculate PPh 21 based on salary level and employee PTKP status.
This article is for education, not tax advice.
Example
Sari, married with status K/1 (spouse non-earning), earns Rp 15 million/month. Sari falls under TER Category B. From the TER table for Category B at Rp 15 million income, the effective rate is 2.5%. PPh 21 for January = Rp 15 million × 2.5% = Rp 375,000. This system is much simpler than the old progressive method, which required extensive manual calculations.
Source: PMK No. 168/PMK.03/2023; Article 21 UU PPh (Law No. 36/2008)
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