Article 21 Income Tax for Government-Funded Civil Servants, Director General of Taxes: Private Sector Also Has Tax Allowance Facilities

JAKARTA — The Director General of Taxes, Bimo Wijayanto, spoke after controversy over the government-funded income tax Article 21 (PPh Pasal 21 DTP) policy, which applies only to civil servants (ASN), the TNI and Polri. Bimo emphasised that in the private sector there are similar schemes, albeit with a mechanism different from that applying to government employees. ‘What is currently surfacing in the media is why the government-funded PPh Article 21 only covers ASN, TNI, and Polri; this can be stated that in the private sector there are also tax allowance facilities,’ he said at a media briefing at the DJP office, Thursday (5 March 2026). Under the scheme, companies can pay their employees’ Article 21 tax, and the cost can be booked as a reduction in gross income or deductible expenses. Moreover, Bimo added that for certain sectors, the government also provides PPh Article 21 DTP facilities. The provision is regulated by Minister of Finance Regulation No. 105 of 2025. He emphasised that the regulation provides the basis for granting the PPh 21 DTP incentive to employees in sectors that meet government criteria. For information, THR is part of employee earnings. This component falls under PPh Pasal 21. Government Regulation No. 58 of 2023 governs THR tax calculation using the mechanism of the effective rate average, or TER. The TER scheme is divided into three categories, namely TER monthly A, TER monthly B, and TER monthly C. The grouping is based on the amount of non-taxable income (PTKP) according to marital status and the number of dependents. The rates range from 0 percent to 34 percent. The rate levels depend on the monthly income received. For ASN, TNI, and Polri there are different provisions. Government Regulation No. 14 of 2024, with updates in 2025 and 2026, governs PPh on THR and the 13th salary funded by the government. These provisions mean that ASN receive THR in full without tax deductions from personal income. Previously, Labour Minister Yassierli responded to worker demands that the holiday allowance, or THR, should not be taxed under PPh Article 21. Yassierli confirmed THR in 2026 will continue to be taxed under PPh Pasal 21 in accordance with the rules in force. He did not go into further detail, saying the proposal to exempt tax needs to be studied together. ‘As per regulations,’ he told journalists in Jakarta, on Tuesday (3 March 2026).