Finance Ministry to Cover Income Tax for Workers in 5 Labour-Intensive Sectors

The Ministry of Finance (Kemenkeu) will cover the Article 21 Income Tax (PPh 21) for workers in five labour-intensive sectors through 2026. This policy is regulated under Ministerial Regulation No. 105/2025 as part of the 2026 fiscal stimulus package. The incentive aims to encourage economic growth. “And to reduce poverty and unemployment rates,” said Director of Outreach, Services, and Public Relations of the Directorate General of Taxes, Inge Diana Rismawanti, at PT Mitra Saruta Indonesia in Nganjuk, East Java, on Thursday, 16 July 2026. The five sectors receiving the government-borne PPh 21 facility are the footwear industry, textiles and ready-made garments, furniture, leather and leather goods, and tourism. The facility applies to fixed and regular gross income, such as salaries and fixed allowances, during 2026. Recipients of the facility include certain permanent employees and certain non-permanent employees with income below Rp10 million per month. For daily, weekly, piece-rate, or contract workers, the facility applies if the average daily wage does not exceed Rp500,000. Workers receiving the facility must have a Taxpayer Identification Number or Population Registration Number integrated into the DJP administrative system and must not be utilising other PPh 21 government-borne facilities. Referring to Article 5 of the regulation, the PPh 21 deducted from employees’ income is paid in cash by the employer simultaneously with the income payment. The value of the tax borne by the government is not considered as taxable income. Employers are still required to prepare deduction evidence and report it in the Monthly Income Tax Article 21 Notification Letter.