In Indonesia, PPh 21 is an income tax imposed on every individual who has a fixed income. PPh 21 also applies to recipients of Additional Income known as THR (Tunjangan Hari Raya).
THR is a form of incentive or bonus given by companies to their employees ahead of the holidays as a form of appreciation for their hard work and dedication throughout the year. THR is considered additional income for employees.
In this case, PPh 21 will be imposed on the THR received by the employee. The amount of tax that must be deducted from the employee’s THR will be calculated based on the PPh article 21 rates in effect at that time.
The amount of tax that must be deducted from the THR will vary depending on the value of the THR received by the employee and the tax rates that apply in that period. The mechanism for calculating PPh 21 can be carried out by the company where the employee works.
It is important to remember that payment of PPh 21 from THR must be made by the company where the employee works, so that employees do not need to take care of the payment independently. Employers must provide proof of withholding of PPh 21 which has been withheld from employees’ THR as a sign that tax payment has been made.
Thus, PPh 21 on THR is one of the obligations that must be fulfilled by the company as a provider of fixed income to its employees. Carrying out this obligation is also a form of company awareness of its responsibility as a good taxpayer in carrying out its tax obligations.
Thus, for companies that provide THR to their employees, it is important to understand the procedures for calculating and depositing PPh 21 related to receiving THR. Correct calculations and appropriate tax deductions will ensure that the company does not violate applicable tax provisions.
Apart from that, for employees who receive THR, it is important to understand that although there may be a tax deduction from the THR received, this is actually a form of employee contribution in fulfilling their tax obligations. By paying taxes according to regulations, employees have participated in supporting the development of the country and the construction of infrastructure needed for shared prosperity.
The Indonesian government continues to increase supervision of company and employee compliance in paying taxes, including PPh 21 on THR. Thus, both companies and employees are expected to understand the importance of compliance in tax matters to support the country’s economic development and growth.
Therefore, it is important for each party to understand and carry out tax obligations properly, including in terms of paying PPh 21 on THR. In this way, company and employee compliance with applicable tax regulations is maintained, while at the same time participating in developing the country’s economy through the tax contributions paid.