Only Employees in 4 Industries Granted State-Borne Art. 21 Income Tax 

“The Employer with certain criteria ... must fulfil the following requirements ... conducting business activities in the footwear industry; textiles and apparel; furniture; or leather and leather goods,” reads an excerpt from Article 3 paragraph (1) subparagraph a MoF Reg. 10/2025, quoted on Friday (7/2/2025).

Employers with these specific criteria must also have a business classification (klasifikasi lapangan usaha/KLU in Indonesian) code listed in the appendix of MoF Reg. 10/2025. The appendix encompasses 56 KLUs of employers with certain criteria that receive the government-borne Art. 21 Income Tax incentive.

The KLU code is the main business classification code listed in the database contained in the tax administration of the Directorate General of Taxes (DGT).

MoF Reg. 10/2025 also comprises sample calculation of government-borne Art. 21 Income Tax. The example illustrates Mr. A who has been working as a permanent employee at PT Z (textile fibre preparation industry/KLU 13111) since 2023. Mr. A is unmarried and has no dependants (TK/O).

Throughout 2025, Mr. A receives or accrues a salary of IDR8 million per month. As Mr. A receives or accrues a fixed and regular gross income not exceeding IDR10 million in January 2025 and PT Z has its main KLU code listed in the appendix of MoF Reg. 10/2025, Mr. A is entitled to utilise the government-borne Art. 21 Income Tax incentive for all gross income, both regular and irregular, during 2025.

With gross income of IDR96 million in a year deducted by the occupational tax relief and personal tax relief, Mr. A’s taxable income in a year amounts to IDR37.2 million.

Art. 21 Income Tax payable in a year is 5% x IDR37.2 million or IDR1.86 million. This implies that Art. 21 Withholding Tax that has been performed until November 2025 amounts to IDR1.32 million, and Art. 21 Withholding Tax that must be performed in December 2025 amounts to IDR540,000.

Government-borne Art. 21 Income Tax of IDR120,000 from January to November 2025 as well as IDR540,000 in December 2025 constitute the incentive that must be paid in cash by PT Z at the time of income tax payment to Mr. A. PT Z must also prepare Art. 21 withholding receipt by including the government-borne Art. 21 Income Tax incentive. (sap)