Employee benefits in kind (BIK) are a common element of compensation packages. However, the tax implications of these benefits can be a source of confusion. This guide will assist you in the taxation of BIK, offering a clear explanation of the relevant regulations and how they are applied.
Indonesia's Minister of Finance Regulation 66 of 2023 (MoF 66/2023) came into effect on July 1, 2023, replacing Ministry of Finance Regulation 167/2018. This new regulation sets forth a revised framework for taxing BIK provided to employees.
The regulation categorizes BIKs into two main types:
| Compensation-in-kind | Facilities-based compensation |
| This category encompasses non-cash remuneration employers provide employees, such as meals and uniforms. | This category covers benefits delivered by providing facilities like housing, vehicles, and medical services. |
MoF 66/2023 clarifies the specific types of BIKs subject to taxation in Indonesia and the conditions under which certain benefits may be exempt. Additionally, the regulation outlines the methods used to calculate the taxable value of BIKs for tax purposes.
Ministry of Finance Regulation 66/2023 reaffirms excluding specific BIK categories from an employee's taxable income. These exemptions include:
Furthermore, BIKs can be considered deductible expenses for employers if they meet the following criteria:
The treatment of BIK expenses for tax purposes depends on their useful life:
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Indonesia's Ministry of Finance Regulation 66 of 2023 introduced exemptions for certain BIK traditionally considered employee taxable income.
Here's a breakdown of these non-taxable categories:
Meals are provided for all employees within the workplace, with no value limit. Meal coupons or reimbursements for off-site duties must not exceed IDR 2 million per employee per month or the value of on-site meals, whichever is higher.
These benefits are legally mandated by the government, with no value limit. Examples include uniforms, employee transportation, safety equipment, and essential medical supplies.
The Director General of Taxes must approve the specific location. The employer can provide the benefit directly or collaborate with another party to cover costs. Examples include housing, healthcare, education, transportation, and sports facilities within designated areas with no predefined value limit.
Food, beverages, or meal ingredients can be offered to all employees for religious holidays (Eid Al-Fitr, Christmas, etc.) and other occasions, with no set value limit. Non-religious gifts are capped at IDR 3 million per employee per fiscal year.
Employees can receive necessary work-related equipment or facilities, such as laptops, computers, phones, phone credit, and internet access, with no predetermined value limit.
Company-provided healthcare benefits should be available to all employees and cover work-related accidents, illnesses, emergencies, and follow-up treatments. There is no predefined value limit for this benefit.
Sports facilities are available to employees, except for specific activities like golf, horseback riding, power boating, gliding, and automotive racing (capped at IDR 1.5 million per employee per fiscal year).
With limitations, employees can access communal or non-communal living facilities (dorms, apartments, houses). Communal facilities have no value limit, while non-communal living is capped at IDR 2 million per employee per month.
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This benefit applies to employees without equity participation in the company whose average gross income does not exceed IDR 100 million per tax year.
Employee contributions to a pension fund supervised by the Indonesian Financial Services Authority (OJK) are non-taxable.
Designated prayer rooms (mushalas, mosques, chapels, temples) are exempt from taxation.
Important note: Any in-kind benefit exceeding the mentioned thresholds after July 1, 2023, will be subject to taxation for employees and employers (withholding and management responsibilities).
Employers have two methods to determine the taxable value of BIKs provided to employees:
To comply with legal requirements, employers must withhold income tax on BIKs. The following table clarifies the withholding, remittance, and reporting process for different timeframes:
| Fiscal year | Employer responsibility | Employee (or service provider) responsibility |
| FY 2022 | No income tax withholding | Exempted from income tax |
| FY 2023 (January – June) | No income tax withholding | Employee calculates, pays, and reports the tax in their Annual Income Tax Return |
| FY 2023 (July 1 onwards) | Withhold, pay, and report tax in Article 21/23/4 (2) Monthly Tax Return | Declare the benefit in their Annual Income Tax Return |
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