Statutory deductions are compulsory withholdings from an employee’s salary as required by law. These may include income tax, social security (like BPJS in Indonesia), and pension contributions. Employers are responsible for deducting and remitting these amounts to the appropriate government agencies.
SPT Masa 1721 A1 is a tax document issued by employers in Indonesia to report an employee’s total annual income and the PPh 21 tax deducted. It serves as proof of income and tax payment for employees when filing their annual tax return (SPT Tahunan). This form ensures accurate and transparent income tax reporting.
Sick leave allows employees to take time off work to recover from illness or injury. It helps protect their health and prevents the spread of illness in the workplace. Depending on company policy or labor law, sick leave may be paid or unpaid.
Shift allowance is an additional payment provided to employees who work irregular schedules, like night shifts or rotating shifts. It compensates for the challenges of working outside standard hours and serves as an incentive for employees to accept such assignments.
Sanctions refer to corrective measures or penalties applied when rules, regulations, or company policies are breached. In the workplace, they can include warnings, fines, suspensions, or other disciplinary actions intended to enforce compliance and maintain order.
Reimbursement refers to the repayment made by an employer to an employee for expenses incurred on behalf of the company such as travel, meals, or office supplies. This process ensures employees are not out of pocket for work-related costs and supports transparent expense management.
PTKP Update is the revision of the non-taxable income threshold (Penghasilan Tidak Kena Pajak) set by the Indonesian government. It determines how much income is exempt from PPh 21 tax, directly affecting employees’ take-home pay. Employers must stay informed of these updates to ensure accurate payroll tax calculations.
PTKP (Penghasilan Tidak Kena Pajak) refers to the portion of income in Indonesia that is exempt from taxation. It represents the minimum amount an individual needs for basic living expenses, so income below this threshold isn’t taxed. PTKP values vary based on marital status and number of dependents, reducing overall tax liability.
A provident fund is a long-term savings scheme where both employers and employees contribute a fixed portion of the employee’s salary each month. The accumulated funds can be withdrawn upon retirement, resignation, or under specific conditions. Provident funds promote financial stability and serve as a key component of employee benefits.
PPh 26 (Pajak Penghasilan Pasal 26) applies to income paid to non-residents or foreign entities from Indonesian sources. It covers payments such as dividends, royalties, interest, and service fees. The Indonesian payer withholds a fixed percentage of the payment as tax and remits it to the government.
PPh 21 (Pajak Penghasilan Pasal 21) is the Indonesian income tax applied to employee earnings, including salaries, bonuses, and benefits. Employers are responsible for calculating, withholding, and remitting this tax to the Directorate General of Taxes. It ensures proper tax compliance for both employers and employees.
Post-termination benefits are forms of compensation provided to employees after their employment ends. These may include severance pay, pensions, or continued healthcare coverage. Such benefits help support financial stability and recognize an employee’s service after separation from the company.
PKP (Penghasilan Kena Pajak) refers to taxable income in Indonesia—the portion of an individual’s or company’s earnings subject to income tax after allowable deductions. Calculating PKP is essential for determining accurate tax liability under Indonesian tax regulations. It forms the basis for applying the appropriate tax rates.
A performance bonus is an additional payment awarded to employees who meet or surpass specific performance objectives. It serves as an incentive to boost productivity, motivation, and goal achievement. Employers use performance bonuses to recognize outstanding work and align employee efforts with company success.
A payslip is a statement provided by an employer that outlines an employee’s total earnings, tax deductions, and final take-home pay for a specific period. It serves as proof of income and is often required for financial or tax purposes. Payslips help employees understand how their salary is calculated and ensure transparency in payroll.
Payroll software is a digital tool that simplifies the process of managing employee salaries, taxes, and benefits. It automatically calculates wages, applies deductions, and generates payslips, reducing manual errors. Many payroll systems also integrate with attendance, HR, and accounting platforms for seamless operations and compliance.
Payroll reconciliation involves reviewing and matching payroll data against financial and tax records to confirm accuracy. It ensures that employee payments, deductions, and employer contributions are correctly calculated and reported. Regular reconciliation helps prevent payroll errors, compliance issues, and financial discrepancies.
A payroll cycle refers to the recurring process through which a company calculates employee earnings, deducts taxes, and issues payments. It defines how often employees are paid—such as weekly, biweekly, or monthly. Managing an accurate payroll cycle ensures timely payments and compliance with labor and tax regulations.
A non-taxable benefit is a form of employee compensation that isn’t subject to income tax, provided it meets certain legal conditions or thresholds. Examples include health insurance, meal subsidies, or small allowances. These benefits help enhance employee welfare without increasing their tax burden.
NIK (Nomor Induk Kependudukan) is Indonesia’s unique citizen identification number assigned to every resident. It appears on the national ID card (KTP) and is used for various administrative purposes, including taxation, healthcare, and government services. The NIK ensures accurate population data and streamlined public administration.