New Non-Taxable Income Threshold

The Minister of Finance (“Minister”) has just issued Regulation No. 101/PMK.010/2016 on the Adjustment of the Non-Taxable Income Threshold (“2016 Regulation”).The 2016 Regulation redefines the lowest income level or tax bracket for individual taxpayers that can be levied upon an individual’s income, commonly known as “non-taxable income” (penghasilan tidak kena pajak –“PTKP”). Once an individual’s income exceeds this lowest bracket, then his or her income then becomes taxable.Prior to the 2016 Regulation, this matter was regulated under Ministry Regulation No. 122/PMK.010/2015 (“2015 Regulation”). [1] The 2016 Regulation is of relevance to all individual taxpayers living in Indonesia.New Non-Taxable Income ThresholdThe 2016 Regulation increases Indonesia’s non-taxable income threshold above that stated in the previous 2015 Regulation. Three factors have to be taken into account when determining any new threshold: