Benefit in kind expense is a deductible expenses for company tax but it is taxable for the employee in Indonesia

Benefit in kind expense becomes a deductible expense but also becomes an object of income tax for its recipients with Law number 7 of 2021 regarding Harmonization of Tax Regulations which is regulated through Government Regulation number 55 of 2022, which is effective from 20 December 2022. Benefit in kind is the provision of goods or enjoyment and not in the form of money.


So that if an employee receives in-kind, it will be calculated as income and will add to taxable income in the calculation of Income Tax Article 21. Examples of benefit in-kind are food, housing facilities, vehicle facilities, medical facilities.


Impact of income tax on benefit in kind as regulated under government regulation number 55 of 2022 to employees and companies

PT A employee, Ms. Salsa is provided with housing facility, apartment rent by the company. The rent for the apartment is calculated as an additional income received by Ms. Salsa. Employers are required to withhold income tax article 21 in accordance with the provisions of the tax laws and regulations.


Impact of income tax on benefit in kind from government regulation number 55 of 2022 to corporate corporate income tax

PT A can include the benefit in kind expense (apartment rent) as a deduction from gross income fiscally (deductible expense).

Prior to PP 55 of 2022, these benefit in-kind expenses cannot be used as a deduction from gross taxable income. For employees, this facility is also not an object of income tax.

The limit of the acquisition price will be explained further after the issuance of the Ministry of Finance Regulation.


Please note, there are also non-monetary rewards that are excluded from income tax objects for benefit in kind, as follows:

  • Food, groceries, beverage ingredients and or drinks for all employees;

  • Benefit in kind and/or enjoyment provided in certain areas;

  • Benefit in kind and/or enjoyment that must be provided by the employer in carrying out the work;

  • Benefit in kind and/or enjoyment sourced from or financed by the state revenue and expenditure budget, regional revenue and expenditure budget, and/or village revenue and expenditure budget; or

  • Benefit in kind and/or enjoyment with certain types and/or limitations.


This article was written by Andini Novriska, S.Ak, associate, accounting & tax advisory of TGS AU Partners

Recommendad Article.


Recommendad Article.