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.
Minimum wage is the legally mandated lowest pay rate that employers can offer to employees. It’s set by the government to ensure workers receive fair compensation for their labor. Minimum wage levels may vary by region, industry, or skill level to reflect local economic conditions and living costs.
Manpower regulation encompasses the set of laws and policies that govern employment practices and labor relations. These rules define employee rights, employer obligations, working hours, wages, and safety standards. In Indonesia and other countries, manpower regulations ensure fair treatment and protect workers’ welfare in the workplace.
Leave encashment allows employees to receive cash payment for their unused paid leave days. This benefit is typically given upon resignation, retirement, or at the end of a financial year. It ensures employees are fairly compensated for earned leave they couldn’t take during their employment period.
A late payment penalty is an additional charge imposed when a payment such as taxes, bills, or employee contributions is made past its deadline. It encourages timely compliance and compensates for administrative delays. The penalty amount is usually a percentage of the unpaid balance or a fixed rate set by law or policy.
A job grade is a system used by organizations to categorize positions based on their responsibilities, skills required, and impact on the business. Each grade corresponds to a specific salary range and benefits structure. Job grading ensures fairness, consistency, and transparency in employee compensation and career progression.
Indemnity refers to an agreement or obligation to compensate someone for losses or damages they experience. It’s commonly used in insurance, employment, or contract contexts to protect one party from financial harm. Indemnity ensures that individuals or organizations are reimbursed for covered risks or liabilities.
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.