Summary
PPh 21 is Indonesia's employee and professional income withholding tax. PMK No. 168/PMK.03/2023 — effective January 1, 2024 — fundamentally changed the calculation method for all PPh 21 withholding agents. The old Annualized method (PER-16/PJ/2016) has been replaced by the TER (Effective Average Rate) system for monthly employee withholding. This guide explains the new TER system, the DPP 50% rule for professionals, and how annual reconciliation works.
What Is PPh 21?
PPh 21 is income tax withheld at source from:
- Salaries, wages, bonuses, allowances paid to employees
- Honoraria and fees paid to directors/commissioners
- Professional fees paid to independent professionals (doctors, lawyers, consultants, etc.)
- Pension and annuity payments
The withholding obligation falls on the payer (employer, company, government agency). Withheld amounts are remitted to the state by the 10th of the following month and reported in SPT Masa PPh 21 by the 20th.
Key Regulations
- PMK No. 168/PMK.03/2023 — Current PPh 21 withholding regulation, effective January 1, 2024. Replaces PER-16/PJ/2016.
- UU No. 36 Tahun 2008 (UU PPh) — Article 21: statutory basis for PPh 21 withholding.
- UU No. 7 Tahun 2021 (UU HPP) — Updated progressive rates; PTKP amounts; top rate 35% for income above IDR 5 billion.
- PER-2/PJ/2024 — DGT implementing regulation for TER calculation tables.
The TER Method for Employees (2024 Onward)
PMK 168/2023 introduced the TER (Tarif Efektif Rata-rata) — Effective Average Rate — system. Under TER:
- Monthly withholding = TER rate x Gross monthly income
- No monthly PTKP deduction; no monthly progressive calculation
- TER rates are pre-calculated tables published by DGT (PER-2/PJ/2024)
- Final reconciliation is done in December using the annualized method
TER Rate Categories
Employees are classified into three TER categories based on their PTKP status:
| Category | PTKP Status | Description |
|---|---|---|
| TER A | TK/0 | Single, no dependents — PTKP IDR 54,000,000 |
| TER B | K/0, TK/1, TK/2, TK/3 | Married or single with 1-3 dependents |
| TER C | K/1, K/2, K/3 | Married with 1-3 dependents |
Each category has a rate table mapping monthly gross income to a TER percentage. The rates range from 0% for low income to approximately 34% for very high income.
Monthly TER Calculation Example
Employee: married, 1 child (K/1), TER C. Monthly gross salary IDR 25,000,000.
- Look up TER C table for IDR 25,000,000 income bracket.
- Assume TER rate = 7% (example).
- Monthly PPh 21 = 7% x IDR 25,000,000 = IDR 1,750,000.
This amount is withheld each month (January-November). December uses the final annualized calculation.
December Reconciliation
In December, the employer calculates the annual PPh 21 using the traditional method:
- Total gross annual income (including benefits, bonuses)
- Minus: PTKP (based on status on December 31)
- Apply progressive rates to net PKP
- Minus: Total PPh 21 already withheld January-November (via TER)
- Result = December withholding (can be positive, zero, or negative/refund)
DPP 50%: Independent Professionals
For non-employee professionals (pekerjaan bebas) — doctors, lawyers, architects, consultants, notaries — PMK 168/2023 Article 3 specifies:
DPP (Deemed Tax Base) = 50% of gross fee
The progressive PPh OP rate then applies to the DPP.
Example — architect fee IDR 20,000,000:
| Step | Amount |
|---|---|
| Gross fee | IDR 20,000,000 |
| DPP (50%) | IDR 10,000,000 |
| PPh 21 (5%) | IDR 500,000 |
| Net received | IDR 19,500,000 |
For cumulative annual DPP above IDR 60 million, the 15% rate applies to the excess.
PTKP (Non-Taxable Income Threshold)
| Status | Annual PTKP |
|---|---|
| Single (TK/0) | IDR 54,000,000 |
| Married (K/0) | IDR 58,500,000 |
| Married + 1 dependent (K/1) | IDR 63,000,000 |
| Married + 2 dependents (K/2) | IDR 67,500,000 |
| Married + 3 dependents (K/3) | IDR 72,000,000 |
PTKP is set by UU HPP Article 7. Changes require a separate PMK issuance.
Progressive PPh OP Rates (2024)
| Net Taxable Income | Rate |
|---|---|
| Up to IDR 60,000,000 | 5% |
| IDR 60,000,001 - 250,000,000 | 15% |
| IDR 250,000,001 - 500,000,000 | 25% |
| IDR 500,000,001 - 5,000,000,000 | 30% |
| Above IDR 5,000,000,000 | 35% |
The 35% top rate was introduced by UU HPP (Article 17) for ultra-high earners.
Annual Filing: SPT 1721 (Employer) and SPT 1770 (Employee)
Employers: File SPT Masa PPh 21 monthly by the 20th. File SPT Tahunan PPh 21 (SPT 1721) annually by March 31. Issue Form 1721-A1 (employees) or 1721-A2 (civil servants) by February 28.
Employees: Use Form 1721-A1 to file their individual SPT 1770 S or SPT 1770 SS by March 31 via DJP Online. Most salaried employees with one employer use SPT 1770 SS (simplified form).
Real-World Example: TER Full Calculation
Employee: Budi, married, 2 children (K/2). Monthly gross salary IDR 30,000,000. Bonus in December IDR 60,000,000.
Monthly TER (Jan-Nov): Assume TER B/C rate for IDR 30M = 9%
- Monthly withholding = 9% x IDR 30,000,000 = IDR 2,700,000 x 11 months = IDR 29,700,000
December reconciliation:
- Annual gross: (12 x IDR 30,000,000) + IDR 60,000,000 = IDR 420,000,000
- PTKP K/2: IDR 67,500,000
- Net PKP: IDR 352,500,000
- PPh: 5% x 60M + 15% x 190M + 25% x 102.5M = 3M + 28.5M + 25.625M = IDR 57,125,000
- Already withheld: IDR 29,700,000
- December withholding: IDR 57,125,000 - IDR 29,700,000 = IDR 27,425,000