Workers Demand Tax-Free Holiday Allowance, Purbaya Awaits President's Guidance

Jakarta — Finance Minister Purbaya Yudhi Sadewa has responded to the Indonesian Workers’ Confederation’s (KSPI) proposal that Tunjangan Hari Raya (THR, holiday allowance) should not be subject to income tax deductions under Article 21 (PPh 21). He stated he has not yet heard of this proposal.

“I have never heard of this request. I am waiting for guidance from Mr Prabowo,” Purbaya said on Thursday (27 February 2026).

However, Purbaya confirmed that further provisions regarding THR and its disbursement will await direction from President Prabowo Subianto. “Once the President returns, perhaps the President will make an announcement,” he added.

Previously reported, KSPI President and Workers’ Party President Said Iqbal had requested that the government exempt workers’ THR from income tax under Article 21 (PPh 21) beginning this year and onwards. According to him, the THR tax deduction policy burdens workers, particularly because THR payments are combined with monthly salary.

“The Workers’ Party and KSPI urgently demand that from this year onwards, THR not be subject to PPh 21 tax deductions,” Iqbal said in a press conference broadcast online on Tuesday (24 February 2026).

He explained that combining salary and THR in a single month causes workers’ income to spike and immediately become subject to progressive tax rates.

“Why is it taxed? THR is usually paid by companies together with salary. This means that income becomes larger. For example, one month’s salary plus one month’s THR from the company equals two months,” he explained.

Due to this arrangement, Iqbal said, workers who should not be subject to tax are compelled to pay PPh 21.

“The tax amount becomes substantial because it is progressive. For instance, someone with a Non-Taxable Income (PTKP) threshold of 4.5 million rupiah would normally not pay tax, but when THR and salary are combined, they become subject to tax — and at a progressive rate. This is what workers are complaining about,” he stressed.

Iqbal expressed hope that the government, particularly President Prabowo Subianto, would address these complaints.