UNOFFICIAL TRANSLATION

REGULATION OF THE FINANCE MINISTER

16/PMK.03/2010
THE PROCEDURE OF WOTHOLDING INCOME TAX ARTICLE 21 ON INCOME IN
THE FORM OF SEVERANCE PAY, PENSION BENEFIT,
OLDAGE ALLOWANCE, AND LAND OLDAGE GUARANTY PAID IN A LUMPSUM
BY THE GRACE OF GOD ALMIGHTY
THE FINANCE MINISTER OF THE REPUBLIC OF INDONESIA,

Considering:
That to implement provisions in Article 10 of Government Regulation No. 68/2009 on the Tariff
of Income Tax Article 21 on Income in the form of Severance Pay, Pension Benefit, Oldage
Allowance, and Oldage Guaranty Paid in a Lumpsum, it is necessary to stipulate a regulation of
the Finance Minister on the Procedure of Withholding Income Tax Article 21 on Income in the
form of Severance Pay, Pension Benefit, Oldage Allowance, and Oldage Guaranty Paid in a
Lumpsum;
In view of :
1. Law No. 6/1983 on General Provisions and Taxation Procedures (Statute Book of 1983 No.
49, Supplement to Statute Book No. 3262), as has been several times amended the latest by
Law No. 16/ 2009 (Statute Book of 2009 No. 62, Supplement to Statute Book No. 4999);
2. Law No. 7/1983 on Income Tax (Statute Book of 1983 No. 50, Supplement to Statute Book
No. 3263) as has been several times amended the latest by Law No. 36/2008 (Statute Book of
2008 No. 133, Supplement to Statute Book No. 4893);
3. Government Regulation No. 68/2009 on the Tariff of Income Tax Article 21 on Income in the
form of Severance Pay, Pension Benefit, Oldage Allowance, and Oldage Guaranty Paid in a
Lumpsum (Statute Book of 2009 No. 169, Supplement to Statute Book No. 5082);
4. Presidential Decree No. 84/P/2009;

DECIDES:
To stipulate :
REGULATION OF THE FINANCE MINISTER ON THE PROCEDURE OF WITHHOLDING
INCOME TAX ARTICLE 21 ON INCOME IN THE FORM OF SEVERANCE PAY, PENSION
BENEFIT, OLDAGE ALLOWANCE, AND OLDAGE GUARANTY PAID IN A LUMPSUM.
Article 1
Referred to in this Regulation of the Finance Minister as :
1.
Income Tax Law Is Law No. 7/1983 on Income Tax as has been several times amended the
latest by Law No. 36/2008 on the Fourth Round of Amendment to Law No. 7/1983 on
Income Tax.
2.
Income tax article 21 is tax on income related to jobs, services or activities in any name and
form received or earned by resident personal taxpayers as laid down in Article 21 of the
Income Tax Law.
3.
Employee isa resident individual receiving income in the form of severance pay, pension
benefit, oldage allowance, and oldage guaranty paid in a lumpsum.
4.
Severance pay is income paid by a job provider including the management of labour
severance pay to employees, in any name and form, in relation with the conclusion of
working period or layoff, including work period appreciation money and rights replacement
money.

5.

6.
7.
8.
9.

(1)
(2)
(3)
a.
b.
c.
(4)

(1)
a.
b.
c.
d.
(2)

(1)
a.
b.
(2)

Pension benefit is income from pension benefit paid to individual participants of pension
fund in a lumpsum according to the law and regulation in the field of pension fund by the
pension fund of job provider or pension fund of financial institution endorsed by the
Finance Minister.
Oldage allowance is income paid in a lumpsum by the oldage allowance implementing
agency to individuals who enter retirement age.
Oldage guaranty is income paid in a lumpsum by the labour social guaranty implementing
agency to individuals entitled to it in a specified period of time or under specified
circumstances.
Labour severance pay managing body is the body appointed by a job provider to manage
severance pay and later pay the severance pay to the employees of the job provider at the
end of job period or in the case of layoff.
Tax withholder is job provider, labour severance pay managing body, pension fund of job
provider; or pension fund of financial institution, labour social guaranty implementing
agency, and other bodies paying severance pay, pension benefit, oldage allowance and
oldage guaranty.
Article 2
Income received or earned by employees in the form of severance pay, pension benefit,
oldage allowance or oldage guaranty paid in a lumpsum is subject to the withholding of
final income tax article 21.
Income in the form of severance pay, pension benefit, oldage allowance or oldage guaranty
as referred to in paragraph (1) is considered as being paid in a lumpsum if its payment is
partly or wholly made within a period of not more than 2 (two) calendar years.
Income in the form of pension benefit paid in a lumpsum as referred to in paragraph (1)
covers:
payment of a maximum of 20% (twenty percent) of pension benefit paid in a lumpsum at
the time when the employee as a participant enters retirement or dies;
payment of monthly pension benefit smaller than certian amount set all the time by the
Finance Minister which is paid in a lumpsum;
transfer of pension benefit to a life insurance company in which the pension fund buys lifetime annuities.
The final income tax article 21 as referred to in paragraph (1) is due at the time when severance pay, pension benefit, oldage allowance, or oldage guaranty is paid in a lumpsum. .
Article 3
The tariffs of income tax article 21 on income in the form of severance pay are set as
follows:
0% (nil percent) for a gross income of up to Rp 50,000,000 (fifty million rupiahs);
5% (five percent) for a gross income of more than Rp50,000,000 (fifty million rupiahs) up
to Rp 100,000,000 (a hundred million rupiahs);
15% (fifteen percent) for a gross income of more than Rp 100,000,000 (a hundred million
rupiahs) up to Rp500,000,000 (five hundred million rupiahs);
25% (twenty five percent) for a gross income of more than Rp500,000,000 (five hundred
million rupiahs).
The tariffs of income tax article 21 as referred to in paragraph (1) shall be applied to the cumulative amount of severance pay paid within a period of not more than 2 (two) calendar
years.
Article 4
The tariffs of income tax article 21 on income in the form of pension benefit, oldage
allowance or oldage guaranty are, set as follows :
0% (nil percent) for a gross income of up to Rp50,000,000 (fifty million rupiahs);
5% (five percent) for a gross income of more than Rp50,000,000 (fifty million rupiahs).
The tariffs of income tax article 21 as referred to in paragraph (1) shall be applied to the cumulative amount of pension benefit, oldage allowance'or oldage guaranty paid within a period of not more than 2 (two) calendar years.

(1)

(2)
(3)

(1)
(2)
(3)
(4)

(1)
(2)
(3)

(1)
(2)
(3)
(4)

(1)
(2)
(3)

Article 5
If portion of the income as referred to in Article 2 paragraph (2) is still owed or is to be paid
in the third year and the following years, the withholding of income tax article 21 shall be
done by applying the tariffs of Article 17 paragraph (1) letter a of the Income Tax Law to the
gross amount of all income that is still owed or is to be paid employees in each of the
relevant calendar years.
The income tax article 21 withheld as referred to in paragraph (1) is not final and can be
treated as preemptive tax payment or tax credit.
If employees do not have taxpayer code numbers, the tariff of income tax article 21 withheld
as referred to in paragraph (1) shall be 20% (twenty percent) higher than the tariff applied
to employees who can produce taxpayer code numbers.
Article 6
If a job provider transfers severance pay paid in a lumpsum to a labour severance pay
managing body, the employees shall be considered as having received rights to the
severance pay.
The transfer of severance pay to a labour severance pay managing body through lumpsum
payment as referred to in paragraph (1) shall be owed to final income tax article 21 as
referred to in Article 2 paragraph (1).
The final income tax article 21 as referred to in paragraph (2) shall be withheld by the job
provider.
At the time when the labour severance pay managing body as referred to in paragraph (1)
pays severance pay to employees, it shall not withhold income tax article 21.
Article 7
If a job provider transfers severance pay gradually or periodically to a labour severance pay
managing body, the employees shall be considered as having not received rights to severance pay.
The transfer of severance pay to a labour severance pay managing body through gradual or
periodic payment as referred to in paragraph (1) is not owed to final income tax article 21 as
referred to in Article 2 paragraph (1).
At the time when the labour severance pay managing body as referred to in paragraph (1)
pays severance pay to employees, the labour severance pay managing body shall withhold
final income tax article 21.
Article 8
In case of transfer of pension benefit to a life insurance company in which the pension fund
buys lifetime annuities, the employees as participants shall be considered as having
received rights to pension benefit paid in a lumpsum.
The transfer of pension benefit to a life insurance company in which the pension fund buys
lifetime annuities as referred to in paragraph (1) is owed to final income tax article 21 as referred to in Article 2 paragraph (1).
The withholding of income tax article 21 as referred to in paragraph (2) is done by the pension fund of job provider or the pension fund of financial institution at the time of buying
lifetime annuities.
At the time the life insurance company as referred to in paragraph (1) pays pension benefit
to employees the withholding of income tax article 21 is not done.
Article 9
Tax withholders shall calculate, withhold, pay and report income tax article 21 owed to severance pay, pension benefit, oldage allowance or oldage guaranty for every tax period.
Income tax article 21 withheld by tax withholders for every tax period shall be paid to the
post offices or banks appointed by the Finance Minister no later than 10 (ten) days after the
end of the tax period.
Tax withholders shall report the withholding and payment of income tax article 21 for each
tax period by submitting periodic income tax returns article 21 to the tax service offices
where they are registered no later than 20 (twenty) days after the end of the tax period.

(4)

(5)
(6)

(7)

If the maturity date for the payment of income tax article 21 as referred to in paragraph (2)
and the dateline for the reporting of income tax article 21 as referred to in paragraph (3) are
holidays including Saturday or national holidays, the payment and reporting of income tax
article 21 can be done in the following working days.
Tax withholders shall give evidence of the withholding of income tax article 21 either
requested or not requested at the time of withholding tax to employees entitled to receive
severance pay, pension benefit, oldage allowance or oldage guaranty.
The obligation to calculate, withhold, pay and report income tax article 21 as referred to in
paragraph (1) and the obligation to give evidence of the withholding of income tax article 21
as referred to in paragraph (5) shall remain applicable to employees subject to the
Withholding tariff of 0% (nil percent).
If in 1(one) tax period, one employee receives more than 1(one) payments of income,
evidence of the withholding of income tax article 21 as referred to in paragraphs (5) and (6)
can be made once for 1(one) tax period.

Article 10
With the coming into force of this Regulation of the Finance Minister, the imposition of
income tax article 21 on severance pay, pension redemption or pension benefit, oldage allowance
or oldage guaranty shall be subject to the following provisions :
1.
severance pay, pension redemption or pension benefit, oldage allowance or oldage guaranty
earned by employees before the coming into force of this Regulation of the Finance
Minister and paid since November 16, 2009, shall be subject to provisions in Government
Regulation No. 149/2000 on the withholding of income tax article 21 on income in the form
of severance pay, pension redemption or pension benefit, oldage allowance or oldage
guaranty;
2.
the procedure of imposing income tax article 21 as referred to in point 1 shall be based on
Decree of the Finance Minister No. 112/KMK.03/ 2001 on the withholding of income tax
article 21 on income in the form of severance pay, pension redemption or pension benefit,
oldage allowance or oldage guaranty;
3.
the time of earning income in the form of severance pay, pension redemption or pension
benefit, oldage allowance or oldage guaranty as referred to in point 1 shall be the time when
employees enter retirement.
Article 11
The procedure of calculating income tax article 21 on income in the form of severance
pay, pension benefit, oldage allowance or oldage guaranty paid in a lumpsum using the tariffs as
referred to in Article 3 paragraph (1), Article 4 paragraph (1) and Article 5 paragraph (1), shall
follow the example as contained in Attachment to this Regulation of the Finance Minister which is
an integral part of this Regulation of the Finance Minister.
Article 12
When this Regulation of the Finance Minister begins to take effect, Decree of the Finance
Minister No. 112/KMK.03/2001 on the withholding of income tax article 21 on severance pay,
pension redemption and oldage allowance or oldage guaranty shall be declared null and void.

Article 13
This Regulation of the Finance Minister shall come into force as of November 16, 2009.
For public cognizance, this Regulation of the Finance Minister shall be promulgated by
placing it the State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
on January 25, 2010
THE FINANCE MINISTER,
(Signed and Stamp)
SRI MULYANI INDRAWATI

Promulgated in Jakarta
on January 25, 2010
THE MINISTER OF LAW AND HUMAN RIGHTS,
(Signed and Stamp)
PATRIALIS AKBAR

STATE GAZETTE OF THE REPUBLIC OF INDONESIA OF 2010 No. 33

ATTACHMENT
EXAMPLE OF THE CALCULATION OF INCOME TAX (PPh) ARTICLE 21 ON INCOME IN THE
FORM OF GUARANTY PAID IN A LUMPSUM SEVERANCE PAY, PENSION BENEFIT,
OLDAGE ALLOWANCE, AND OLDAGE GUARANTY PAID IN A LUMPSUM
1. Example of the calculation of PPh Article 21 on severance pay, pension benefit, oldage
allowance or oldage guaranty paid in a lumpsum. Pirman Nurjaman has been a regular worker
of PT Asgar Manah since 1980. PT Asgar Manah has included all its employees in a pension
programs by setting up a pension fund of PT Asgar Manah. In January 2010, Pirman Nurjaman
was laid off by receiving a severance pay of Rp600,000,000 from PT Asgar Manah. In addition,
Pirman Nurjaman is also entitled to receive a pension benefit of Rp300,000,000 from the
pension fund of PT Asgar Manah. Pirman Nurjaman asks for a lumpsum payment of pension
benefit as much as 20% of the pension benefit and the remaining (80% of the pension benefit)
will be paid monthly. The pension fund of PT Asgar Manah pays pension benefit in a lumpsum
as much as 20% x Rp300,000,000 = Rp60,000,000. The calculation of PPh Article 21 owed to
severance pay :
0% x Rp 50,000,000
5% x Rp50,000,000
15% x Rp400,000,000
25% x Rp100,000,000
Total

= Rp
0
= Rp 2,500,000
= Rp 60,000,000
= Rp 25,000,000
--------------------- (+)
Rp 87,500,000

The calculation of PPh Article 21 owed to 20% of the pension benefit paid in a lumpsum :
0% x Rp50,000,000 = Rp
0
5% xRp10,000,000 = Rp 500,000
--------------------- (+)
Total
RP 500, 000
The calculation of PPh Article 21 on the payment of 80% of pension benefit paid on a monthly
basis is based on Regulation of the Finance Minister No. 252/PMK.03/2008 on the guidance
for the withholding of tax on income in relation to the jobs, services and activities of
individuals.
2. Example of the calculation of PPh Article 21 on severance pay paid gradually if PT Asgar Manah
pays severance pay to Pirman Nurjaman in stages through the following timetable:
a. January 2010
Rp240,000,000
b. January 2011
Rp120,000,000
c. July 2011
Rp120,000,000
d. January 2012
Rp120,000,000
the calculation of PPh Article 21 due :
a. January 2010:
0% x Rp 50,000,000 = Rp
0
5% x Rp 50,000,000 = Rp 2,500,000
150% x Rp140,000,000 = Rp 21,000,000
------------------ (+)
RP 23,500,000

b. January 2011:
15% x Rp120,000,000 = Rp18,000,00
c. July 2011:
15% x Rp120,000,000 = Rp18,000,000
d. January 2012:
Because payment of severance pay already enters third year the tariff of PPh Article 21 for
severance pay paid in January 2012 is the tariff under Article 17 paragraph (1) letter a of the Income Tax Law and the withholding of PPh Article 21 in January 2012 is not final.
The calculation of PPh Article 21 for January 2012:
5% x Rp 50,000,000 = Rp 2,500,000
15% x Rp 70,000,000 = Rp 10,500,000 (+)
-------------------Total
Rp13,000,000
THE FINANCE MINISTER
(Signed and Stamp)
SRI MULYANI INDRAW'ATI
===(S)===
Disclaimer :
All information contained in this regulation are intended only to be a guide. It must not be relied
upon as basis in making business decisions, or applied to specific situations without previously
seeking proper professional advice from a tax consultant.
All entities/persons should not make any decisions based on these regulations unless previously
advised by their tax consultant.