The Government of Indonesia once again demonstrates its commitment to protecting workers and labor-intensive industries through the Minister of Finance Regulation Number 105 of 2025 on Income Tax Article 21 on Certain Income Borne by the Government (PPh 21 DTP). This policy is part of the Economic Stimulus Package for State Fiscal Year 2026 and has been effective since 31 December 2025.
PPh 21 DTP is a tax facility whereby income tax that would normally be withheld from employees’ salaries is no longer borne by the employees, but is instead fully covered by the Government since the tax period of January 2026 up until December 2026.
Notably, under this scheme:
As a result, employees directly receive an increase in their monthly take-home pay. More than a fiscal measure, this incentive is designed as a strategic instrument to safeguard public purchasing power while simultaneously supporting national economic stability amid ongoing global economic uncertainty.
This facility does not apply universally. It is selectively granted to employees working for Specific Business Sectors (Labor-Intensive Industries):
In addition, the employer must have a Business Field Classification Code (KBLI) that falls within 133 primary codes recorded in the Directorate General of Taxes’ administrative database. The determination of the relevant KBLI is based on:
To qualify for the PPh 21 DTP incentive, employees must meet specific income-related requirements. The PPh 21 DTP incentive is granted to the following categories:
1. Permanent Employees
2. Non-Permanent Employees (Holding a Taxpayer Identification Number/NPWP)
3. Gross Income Components
Gross income for this purpose includes:
The Government emphasizes several fundamental principles:
Employees receiving this facility may not receive other PPh 21 DTP incentives under prevailing tax regulations.
The incentive must be paid in cash by the employer to the employee concurrently with salary payment.
Employers are strictly prohibited from retaining, withholding, or utilizing PPh 21 DTP funds in any form.
Unlike purely administrative incentives, PPh 21 DTP provides direct cash benefits to employees. Accordingly, this incentive is not limited to administrative relief, but delivers a tangible financial benefit in the form of an increase in employees’ take-home pay, which is paid in cash by the Employer concurrently with the payment of the employees’ remuneration, and must be supported by a withholding tax slip issued by the Employer.
More encouragingly:
Subsequent salary increases (such as promotions or bonuses) do not nullify eligibility, provided that the income requirement in January 2026 has been satisfied.
This policy therefore offers certainty and enhanced financial security for workers.
As previously mentioned, this incentive is designed as a strategic instrument to safeguard public purchasing power while simultaneously supporting national economic stability amid ongoing global economic uncertainty.
The PPh 21 DTP policy for 2026 goes beyond tax relief. It aims to:
This stimulus is expected to serve as a vital buffer for sectors most vulnerable to economic fluctuations, while ensuring the continued welfare of workers and their families.
Through Minister of Finance Regulation Number 105 of 2025, the Government reaffirms that fiscal policy should not be measured solely by revenue statistics, but by industrial resilience, employment sustainability, and the welfare of millions of Indonesian families.
With the implementation of the PPh 21 DTP incentive, Indonesia moves closer to a modern, transparent, and equitable tax ecosystem, delivering tangible benefits to society. Let us collectively ensure that this policy is implemented accurately, accountably, and with a real impact on national development.
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