The income from the severance pay received by the employee will be subject to and deducted from the final Article 21 Income Tax, Article 21 Income Tax on the severance pay must be deposited to the State no later than 10 days after the end of the tax period and reported on the 21st term SPT PPh by making Form 1721-VII Proof of Withholding Income Tax Article 21 (Final).
Based on PP no 68 of 2009, the rate of PPh article 21 for income in the form of severance pay is determined as follows:
– Earnings up to IDR 50,000,000 at 0%
– Income above IDR 50,000,000 to IDR 100,000,000 by 5%
– Income above IDR 100,000,000 to IDR 500,000,000 by 15%
– Earnings above IDR 500,000,000 by 25%
The tariff above is the Article 21 Income Tax rate which is applied to the cumulative amount of severance pay paid for a maximum of 2 calendar years and is final.
If there is part of the severance pay that is given in stages from the third year onwards, then the calculation of the PPh 21 severance pay is carried out using the PPh 21 Progressive Tax rate which has just been amended through the HPP Bill which can be viewed via this link: Changes in the Progressive Tax Rate for PPh 21 Individuals , Valid 2022 – SM Consulting Tax and Payroll Consultant
The following is a Simulation of the Calculation of PPh 21 Severance Pay at once:
PT ZG Pays Severance Pay to Karni (with TIN) of IDR 170,000,000 on 26 June 2022
Accordingly, the calculation of Income Tax Article 21 payable is as follows:
0% x IDR 50,000,000 = IDR 0
5% x IDR 50,000,000 = IDR 2,500,000
15% x IDR 70,000,000 = IDR 10,500,000 (+)
= IDR 13,000,000