DJP: Withholding of THR tax to prevent year-end tax pile-up

Jakarta (ANTARA) - The Directorate General of Taxes (DJP) of the Ministry of Finance says that the withholding of personal income tax (PPh) on the holiday allowance (THR) is intended to avoid a buildup of tax deductions at year-end. Yon Arsal, Expert Staff to the Finance Minister on Tax Compliance, in a media briefing at the DJP Head Office in Jakarta on Thursday, explained that PPh withholding on THR is part of the implementation of the average effective rate (TER) which has been in effect since 2025. The policy, he said, is not about imposing a new tax burden, but about redistributing the pattern of tax payments to be more evenly distributed across the year. ‘Most importantly, last year there was no actual additional tax burden for taxpayers. What happened was a change in behaviour: the tax burden that used to be concentrated in December is now spread across almost every month,’ Yon said. He noted that the system means withholding tax at the end of December is not as large as usual, because the tax burden has already been withheld in earlier months, including THR tax. Given that the system has been in place for more than a year, Yon hopes the public will have a better understanding of the tax withholding policy under the TER system. Separately, the DJP continues to evaluate tax policy. In this context, DJP pays attention to the alignment of tariff rates to avoid underpayment or overpayment. ‘So we hope there will be fewer complaints this year,’ he said. As a note, 6 million taxpayers have submitted their annual income tax return (PPh) for the 2025 tax year as of 5 March at 08:00 WIB. Returns received come from 5,872,158 individual taxpayers, 129,231 corporate taxpayers in rupiah, and 113 corporate taxpayers in US dollars. Director General of Taxes Bimo Wijayanto said there are still 9 million taxpayers who have not yet filed SPT. Assuming average reporting of SPT around 250 thousand taxpayers per day and an assumed remaining 10 working days in March 2026, Bimo estimates SPT filings could reach 8.5 million by the end of the month.