Workers Oppose Tax Deduction from Holiday Allowance, Say: "Cannot See Citizens Happy, Everything Gets Taxed"
JAKARTA — A number of workers have expressed disagreement with the government’s policy of imposing tax on Holiday Allowance (THR).
The tax deduction policy on THR was first announced by the Directorate General of Taxes (DJP) of the Indonesian Ministry of Finance. The THR tax deduction is based on Government Regulation (PP) No. 58 of 2023 and Finance Ministry Regulation (PMK) No. 168 of 2023, which came into effect on 1 January 2024.
THR is divided into three categories, namely A, B, and C, determined by marital status and dependents (PTKP). Category A comprises taxpayers who are unmarried or married without dependents. Category B comprises taxpayers with middle-tier PTKP status, including unmarried individuals with two or three dependents and married individuals with one or two dependents. Typically, the tax deduction rate for this category is lower than category A.
Category C comprises taxpayers with the highest PTKP status, where workers are married with three dependents. The tax imposed tends to be lowest among categories A and B because of the highest number of dependents.
The tax deduction formula is calculated by adding the monthly salary and THR, then multiplying by the category tax rate (A, B, or C). Consequently, the amount of tax each worker must pay differs accordingly.
However, this tax deduction only applies to private sector workers. Conversely, Civil Service Apparatus (ASN), the military (TNI), and National Police (Polri) are exempted from THR tax deductions.
One private sector employee in East Jakarta named Rindang, 29, expressed strong objection to the THR tax deduction. “It seems the government cannot allow citizens to enjoy a little happiness from receiving THR because everything gets taxed,” she explained when interviewed in South Jakarta on Monday.
Rindang pointed out that not all private sector employees receive THR equal to one month’s salary as the government assumes. “Even when I receive THR, it’s never a full month’s salary, only around 5 million rupiah. Now they want to deduct taxes from it too. My THR hasn’t been paid yet, so I cannot yet see how much the tax deduction will be,” Rindang said.