Private Sector Thirteenth-Month Bonuses Subject to Tax Whilst Civil Service Are Exempt, Finance Minister Explains

Jakarta — Finance Minister Purbaya Yudhi Sadewa has responded to widespread protests from private sector employees regarding thirteenth-month bonus (THR) taxation. According to him, the taxation rules are sufficiently fair for both private and civil service workers.

He explained that civil service THR taxation is covered by the government because they are state employees, a practice that has been in place for a considerable time.

Meanwhile, private sector employee THR tax deductions depend on each company’s policy. There is no binding regulation stipulating that private sector THR cannot be taxed. Therefore, companies have discretion to cover employee bonus taxation or not.

“This is a sufficiently fair tax calculation process. For civil servants, the government covers it as their employer. So if the private sector complains, they should complain to their employers,” Purbaya stated at the Finance Ministry in Central Jakarta on Monday (9 March 2026).

Director-General of Taxes Bimo Wijayanto previously explained that in the private sector, some income tax burdens are also directly covered by employers, similar to how the government covers income tax for state officials. According to him, there are facilities that private companies can utilise.

“This can be explained in that the private sector also has tax allowance facilities where tax is borne by the employer, and these costs are also deductible,” Bimo said during a Tax Class session at the Tax Office Headquarters in Jakarta on Thursday (5 March 2026).

Additionally, Bimo emphasised that certain employees working in labour-intensive sectors have also been given government-funded income tax relief, as stipulated in Finance Ministry Regulation (PMK) Number 105 of 2025.

“Some employees in certain sectors are also provided with income tax coverage funded by the government, under the latest regulation PMK 105 of 2025,” he asserted.

Finance Minister’s Expert Staff on Tax Compliance Yon Arsal added that taxes on additional income such as thirteenth-month bonuses were already being applied as in previous years.

For example, last year when the government implemented an effective average tax rate scheme, it appeared that a large tax burden was collected during the bonus period, but the tax had actually been deducted proportionally to monthly income. Previously, the tax burden was concentrated in December, but now it is spread relatively evenly across most months. Therefore, employees should experience smaller tax deductions in December.

“Because the tax burden that used to be concentrated in December is now spread almost evenly across months. So it will be the same — employees who feel their THR is already being taxed will have smaller tax deductions in December,” Yon stated.

Accordingly, he confirmed that there would be no change to the income tax collection scheme this year, including additional income such as THR. However, there is a possibility that the effective average tax rate scheme will be evaluated.