SUMMARY OF PMK 66/2023

Background :

PMK No.66 Year 2023 basically stipulates that the employer or the provider of
benefits in the form of natura or enjoyment is obliged to withhold income tax (PPh)
on the natura and enjoyment provided.

PMK No.66 Year 2023 is a PMK issued to complement PMK No. 167 Year 2023 which
has not accommodated the need for adjustments to the income tax treatment of
reimbursements or rewards received or obtained in the form of arrangements or
enjoyment.

Key Points of PMK 66/2023:

PMK No.66 Year 2023 has been in effect since July 1, 2023

1. Treatment of Reimbursement Costs or Fees in Kind

The government stipulates that the cost of reimbursement or compensation

provided in the form of in-kind benefits in connection with work/services can be
deducted from gross income to determine taxable income by the employer.

Employment-related reimbursement costs: costs related to the employment

relationship between the employer and the employee.

Service-related reimbursement costs: costs incurred due to service transactions

between taxpayers.

Expenditures for reimbursement costs in the form of enjoyment that has a useful
life of <1 year will be charged through depreciation or amortization in
accordance with the provisions of the laws and regulations in the Income Tax
sector.

Expenditures for reimbursement/reimbursement costs in the form of enjoyment

that has a useful life of > 1 year, expenditures for reimbursement or
compensation costs are charged in the year the expenditure is incurred.

2. List of Natura that are subject to Income Tax and their exemptions

Based on PMK 66/2023, the following in-kind items can be used as income tax
objects.

1. Gifts or parcels received by workers other than for religious holidays worth
more than Rp3 million.
 2. Work equipment and facilities such as computers, laptops, or cellular
phones and their supporting facilities, such as credit or internet connections
received not to support work.

3. Sports facilities, such as golf, horse racing, motorized boat racing, gliding,
and/or automotive sports that have a total value of more than Rp1.5 million
per employee within one tax year.

4. Office facilities in the form of a residence whose utilization rights are held
by an individual, either an apartment or a landed house, worth more than
IDR 2 million for each employee for a period of one month.

5. Vehicle facility for employees who have an average gross income in the
last 12 months of up to IDR100 million per month from the employer.

6. Food and/or beverage coupons with a value exceeding Rp2 million for
each employee within aperiod of 1 month. These coupons are non-monetary
transaction tools that can be exchanged for food and/or beverages.

Based on PMK 66/2023, the following natura are exempted from Natura Income
Tax withholding.

1. Food, Food Materials, Beverage Materials, and/or Beverages for All

Employees. Example: Lunch and snacks while at the office.
2. Nature and/or Enjoyment Provided in Certain Areas. Example: offices
located near sea waters with mineral reserve facilities.
3. Nature and/or Enjoyment Provided in the Implementation of the Work.
For example: lodging for ship crew, shuttle facilities on business trips, and
facilities provided in the context of handling disaster-affected employees.
4. Natura and/or Enjoyment Sourced from APBN, APBD, and/or Village APB.
5. Nature and/or Enjoyment with Certain Types/Limitations. Example:
holiday gifts and religious facilities at work.

3. Procedures for Calculating Natura as Income Tax Objects

PT.ABC provides food and drinks to all employees in the office with a value of
Rp1,500,000.00 per employee per month. Then employees in the marketing
division are given a coupon value of
Rp3,000,000.00 per employee per month because employees of this division
have more work time outside the office. How much of the value of in-kind
food and beverage coupons is taxable?
In accordance with PMK 66 2023, the non-taxable in-kind limit for food
and/or beverage coupons is IDR 2.000.000 per month. Meanwhile, the
coupon value for marketing division employees at PT XYZ is known to be IDR
3.000.000 per month. Therefore, there is a difference between the specific
value limitation and the value of food and beverage coupons. The following is
the calculation.

Value of Natura Food and Beverage Coupons as Income Tax Objects

Taxable Coupon Value : (Value of in kind gift) – (Limit of
certain non-taxable amount)
Taxable Coupon Value : IDR 3.000.000 – IDR 2.000.000
Taxable Coupon Value : IDR 1.000.000

Since the deduction of Income Tax on Natura is carried out with the
mechanism of Income Tax
Article 21, the value of natura subject to tax will be included in the gross
income of the employee concerned.
Conclusion:
The issuance of PMK 66 2023, companies are obliged to deduct income tax
on in-kind as an employer or reward provider. Later, the Natura Income Tax
withholder will deposit the tax into the state treasury. Furthermore,
employees who receive this facility or enjoyment are required to report
income tax deductions in the Annual Tax Return.