Benefits in Kind in Indonesia: Which Employee Perks Are Taxed
Benefits in kind in Indonesia count as the employee's income. Which perks are exempt, the limits on housing, cars and gifts, and how PPh 21 applies.
References (4)
- UU No. 7 Tahun 2021 on Harmonised Tax Regulations (HPP), amending the Income Tax Law from the 2022 tax year. Article 4(1)(a) makes benefits in kind income, Article 4(3)(d) lists the exempt groups, Article 6(1)(n) makes them deductible, and Article 9(1)(e) is deleted.
- PP No. 55 Tahun 2022 on adjustments in the income tax field. Articles 23 to 31 cover benefits in kind.
- PMK No. 66 Tahun 2023 on the income tax treatment of benefits in kind, in force 1 July 2023. It revoked PMK No. 167/PMK.03/2018.
- PMK No. 168 Tahun 2023 on PPh 21 and PPh 26 withholding, in force 1 January 2024. Articles 5 and 19 apply to benefits in kind.
Since the 2022 tax year, benefits in kind in Indonesia count as the employee’s income. A benefit given in goods, or in the use of a facility, is taxed each month through PPh 21, the income tax an employer withholds from pay, unless it is on the exempt list. That is the Income Tax Law, Articles 4(1)(a) and 4(3)(d), as amended by UU No. 7 of 2021 on Harmonised Tax Regulations (HPP).
Before HPP it worked the other way round. A benefit in kind was not the employee’s income, and the employer could not deduct its cost (the old Article 9(1)(e), now deleted). The detailed rules are in PP 55/2022 and in PMK 66/2023 (Peraturan Menteri Keuangan, a Minister of Finance regulation), in force since 1 July 2023.
Many everyday perks are exempt, or exempt up to a set amount. Everything else is simply added to pay.
What counts as a benefit in kind
The regulation recognises two kinds. The first is goods whose ownership passes to the employee, called natura: a gift, a phone they keep, groceries. The second is the use of a facility or a service, called kenikmatan. It can be the employer’s own, such as a company flat, or one the employer rents or pays a third party for (PMK 66/2023, Article 3(4)–(5)).
Goods are valued at market value, and a facility at what the employer spends, or should spend, to provide it (PP 55/2022, Article 29; PMK 66/2023, Article 22(1)). A benefit that runs for longer than a month, such as a car or an apartment, is valued month by month for as long as the employee uses it (PMK 66/2023, Article 22(3)).
Which benefits are exempt
The exemptions an employer meets in practice fall into four groups (PMK 66/2023, Article 4).
Food and drink at work
Meals and drinks provided for all staff at the workplace. Staff who work away from it, such as sales and field teams, may have meal coupons up to IDR 2,000,000 a month (PMK 66/2023, Article 5(1) and 5(4)).
What the job requires
Items a ministry or agency requires for staff safety or health, such as uniforms, safety equipment and a staff shuttle (PMK 66/2023, Article 6).
Designated remote sites
Housing, health care, schooling and similar facilities at a work site the tax office has designated a remote area. In practice that means sites such as mines, not a city office (PMK 66/2023, Article 8(1)).
Listed items within limits
A fixed list of benefits, some exempt in full and some up to a set value, set out in the table below (PMK 66/2023, Article 7 and Lampiran A).
Common perks and how each is taxed
| How it is treated | Limit or condition | |
|---|---|---|
| Company car | Exempt only if the employee passes a two-part test | No shares in the employer, and average gross pay of up to IDR 100,000,000 a month |
| Individual housing | Taxed above the limit | IDR 2,000,000 a month is exempt |
| Communal housing | Exempt | A shared mess, dormitory or barracks; no value limit |
| Phone, laptop and internet | Exempt | Must support the employee’s work; no value limit |
| Health insurance premium | Added to gross pay | Not on the exempt list |
| Medical treatment | Exempt only in set cases | Work accidents, work-related illness, emergencies and their follow-up care |
| Sports facilities | Taxed above the limit | IDR 1,500,000 a tax year; golf, horse racing, powerboating, gliding and motor sport never qualify |
| Religious-holiday hampers | Exempt | Food and drink given to all employees; no value limit |
| Other gifts | Taxed above the limit | IDR 3,000,000 per employee a tax year |
| Children’s school fees | Taxed at the cost to the employer | Not on the exempt list |
| Home-leave flights | Taxed at the cost to the employer | Not on the exempt list |
| Pension contributions | Exempt | Paid into a pension fund approved by the financial services authority (OJK) |
| Tax paid by the employer | Taxed, and grossed up | Applies to net-salary packages |
The limits come from Lampiran A of PMK 66/2023, which speaks of “sports facilities from the employer”. Health insurance is part of gross pay under PMK 168/2023, Article 5(3)(f). A hamper is also different from the religious holiday allowance: that is paid in money, so it is pay rather than a benefit in kind.
The car test is about the employee, not the car
A company car is exempt only for an employee who holds no shares in the employer and whose gross pay has averaged IDR 100,000,000 a month or less over the last 12 months, with the car itself counted in that average. An employee who fails either part is taxed on the whole car benefit, not just an excess (PMK 66/2023, Lampiran A item 8; Lampiran J, Contoh 4). A director who holds shares in the employer is therefore taxed on the whole car benefit, which is simply added to their monthly pay.
How housing is valued
An apartment is valued at everything the employer pays for it. This is the regulation’s own example, for one month.
| Description | IDR |
|---|---|
| Rent | 50,000,000 |
| Service charge | 15,000,000 |
| Electricity, water and internet | 10,000,000 |
| Value of the benefit | 75,000,000 |
| Exempt amount Individual housing limit, per month | (2,000,000) |
| Taxable for the month | 73,000,000 |
Only the excess over the limit counts as income (PMK 66/2023, Article 7(4)).
How it reaches the payslip
The employer withholds the tax at the end of the month in which the goods are handed over or the facility is made available (PMK 66/2023, Article 23(2)). The benefit’s value is added to that month’s gross pay (PMK 168/2023, Article 5(2)), so the payslip carries it with no separate calculation. The rates and the monthly method are explained in how the PPh 21 effective rate tables work.
Monthly withholding on benefits in kind in Indonesia began with July 2023 (PMK 66/2023, Articles 23(4) and 27).
One point catches out net-salary packages. When the employer pays the employee’s tax, that payment is a benefit too, so the tax is grossed up (PMK 168/2023, Lampiran I.4).
Our payroll service values each benefit and runs that monthly PPh 21 for clients. For a director who is also a shareholder, their own position and the company’s are best looked at together, which our personal tax service does.