| Dasaoptima
The Indonesian Government has issued MoF Regulation No 66/2023 which came into force on July 1, 2023, regarding the Income Tax Treatment for compensation or remuneration related to work or services rendered, received in the form of benefit-in-kind (BIK). Deductible BIKs are BIKs that represent compensation related to:
- Employment relationships between employers and employees
- Service transactions between taxpayers
The cost reimbursement or compensation in the form of BIKs in connection to work and/or services provided can be deducted from gross income to determine the taxable income of the employer or provider of BIKs to the extent that it is a cost of obtaining, collecting and maintaining income (3M). On the other hand, for recipients, BIKs are the object of income tax.
Under MOF Regulation 66/2023, starting on 1 July 2023 employers are obliged to withhold income tax on BIKs that exceed the value limits. All BIKs received in 2022 by employees or service providers are treated as non-taxable objects. Tax of BIKs received from 1 January 2023 to 30 June 2023 that have not been withheld by the employers must be calculated, paid and reported by the recipient in their annual individual income tax return.