Income Tax Article 26 (PPh 26) applies to income earned in Indonesia by non-resident individuals or foreign companies. It covers payments like dividends, interest, royalties, and service fees sent abroad. The Indonesian payer withholds a specified tax rate before remitting the payment, ensuring proper taxation of foreign income sources.
Income Tax Article 23 (PPh 23) regulates the withholding of tax on certain non-salary payments made to resident taxpayers in Indonesia. It applies to income such as professional services, rentals, royalties, interest, and dividends. The payer withholds a percentage of the payment and remits it to the Directorate General of Taxes as part of compliance.
Income Tax Article 21 (PPh 21) is an Indonesian tax regulation requiring employers to withhold income tax from employee salaries. The amount depends on income level, benefits, and marital status. Employers are responsible for calculating, deducting, and reporting PPh 21 to the Directorate General of Taxes each month.
An honorarium is a voluntary payment made to someone for professional services or contributions not covered by a formal contract. It’s often given to speakers, consultants, or experts as a gesture of appreciation rather than as regular compensation. Honorariums are typically subject to specific tax regulations depending on local laws.
The Gross Up Method is a payroll calculation technique where an employer increases an employee’s gross salary to include applicable taxes. This ensures the employee receives the intended net amount after tax deductions. It’s commonly used for bonuses or benefits that employers want employees to receive in full without tax reduction.
Garnishment is a court-approved procedure where an employer withholds part of an employee’s salary to pay off debts or legal obligations. Common reasons include unpaid loans, taxes, or child support. Employers must follow legal limits and procedures to ensure fairness and compliance during wage garnishment.
A fixed allowance is a consistent amount paid to employees on top of their basic salary, usually for expenses like transportation, meals, or housing. Unlike variable pay, it doesn’t change based on performance or attendance. Fixed allowances help standardize compensation and provide predictable financial support to employees.
E-SPT (Electronic Surat Pemberitahuan) is a digital application provided by Indonesia’s Directorate General of Taxes for filing tax returns online. It replaces manual paper forms, making tax reporting faster, more accurate, and environmentally friendly. Through E-SPT, individuals and companies can easily submit monthly or annual tax reports electronically.
Employer contributions are mandatory or voluntary payments that employers make on behalf of their employees to benefit programs. These may include social security, health insurance, retirement funds, or other welfare schemes. Such contributions ensure employees receive long-term protection and financial security beyond their regular salary.
Employee Self Service (ESS) is a digital platform that allows employees to view and update their personal details, payslips, leave balances, and attendance records. It reduces administrative workload by enabling staff to handle routine HR tasks themselves. ESS improves efficiency, transparency, and employee engagement within organizations.
E-Bupot (Electronic Bukti Potong) is a digital platform developed by Indonesia’s Directorate General of Taxes for reporting and issuing withholding tax slips. It simplifies the process of managing PPh 23 and PPh 26 transactions by automating data entry and submission. E-Bupot enhances accuracy, transparency, and compliance in tax reporting.
DPLK (Dana Pensiun Lembaga Keuangan) is a financial institution pension fund in Indonesia designed to help individuals prepare for retirement. Managed by banks or insurance companies, DPLK programs allow participants to make regular contributions that grow over time. The accumulated savings provide financial security upon retirement.
A digital payslip is an online or electronic document that shows an employee’s salary breakdown, including income, deductions, and take-home pay. It replaces paper payslips, offering secure and convenient access via email or HR platforms. Digital payslips improve efficiency, reduce paper use, and make payroll management easier for both employers and employees.
DGT (Directorate General of Taxes or Direktorat Jenderal Pajak) is the Indonesian government body that manages tax collection and enforcement. It oversees taxpayer registration, audits, and compliance with tax regulations. The DGT ensures the effective implementation of Indonesia’s tax system and revenue policies.
Cost to Company (CTC) represents the total annual expense an employer incurs for an employee. It includes basic salary, bonuses, benefits, insurance, and other allowances. Understanding CTC helps employees see the full value of their compensation package beyond just take-home pay.
Contract types refer to different kinds of employment agreements used to define how a person is hired and compensated. Common types include permanent, fixed-term, and freelance contracts. Each type specifies job duration, benefits, and responsibilities, helping employers and employees understand their legal and work arrangements.
A Collective Labor Agreement (CLA) is a formal contract between an employer and a group of employees, usually represented by a labor union. It defines terms such as wages, working hours, benefits, and dispute resolution procedures. CLAs help ensure fair labor practices and protect the rights of both employees and employers.
BPJS registration is the procedure for signing up individuals or workers for Indonesia’s BPJS Kesehatan and BPJS Ketenagakerjaan programs. Through this process, participants gain access to health coverage, workplace protection, and other social security benefits. Employers are responsible for registering their employees and managing monthly contributions.
An audit trail is a detailed, time-stamped record of all actions or changes made within a system or process. It helps organizations verify data integrity, detect unauthorized access, and maintain transparency. Audit trails are essential for compliance, security, and effective internal control.
Attendance management is the process of monitoring and recording employees’ working hours, absences, and lateness. It helps organizations maintain discipline, optimize workforce planning, and ensure fair payroll calculations. Modern systems often use digital tools or biometric technology for accuracy and efficiency.