Written by Muhammad Hilmi on 11/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.
The implementation of the Average Effective Rate (AER) for Income Tax Article 21 has been in effect since January 1, 2024. This initiative aims to simplify the complex withholding scheme. It is essential to understand the implications and benefits of this new scheme for individual taxpayers.
Income Tax Article 21 is a tax on various forms of income, including salaries, wages, honoraria, and allowances received by domestic individual taxpayers. On the other hand, the Average Effective Rate (AER) is a recalculated withholding scheme introduced for each tax during the period. This method aims to streamline the calculation process, providing ease and efficiency for taxpayers.
The introduction of the Average Effective Rate (AER) in Income Tax Article 21 addresses the complexity of withholding scheme. By streamlining the process, AER reduces administrative costs and enhances efficiency in tax management. Furthermore, it ensures greater compliance with tax regulations and fosters transparency in the taxation system.
Implementing the Average Effective Rate (AER) for Income Tax Article 21 is crucial for ensuring smooth tax operations. It is best done at the beginning of each tax period to streamline the calculation process for taxpayers and tax authorities alike. By adopting AER early in the tax year, individuals can benefit from simplified calculations and avoid potential discrepancies in tax withholding.
The adoption of the Average Effective Rate (AER) brings several benefits to individual taxpayers and tax authorities.
At Putranto Alliance, we offer comprehensive tax reporting services to assist individuals and corporations in complying with Income Tax Article 21 regulations. Our experienced professionals ensure accurate calculations and timely submissions, allowing clients to focus on their core business activities. By entrusting us with tax compliance matters, individuals and companies can mitigate risks and ensure adherence to applicable laws and regulations.
We offer a comprehensive suite of services, including:
Withholding Income Tax Article 21 is mandatory for employers, including individuals and entities, government agencies, pension funds, and activity organizers.
To calculate the Monthly Effective Rate:
For example:
Mr. R is a permanent employee who works at PT Surya and earns a salary of IDR 6,200,000 per month (including BPJS). Mr. R is married and has 1 son.
Based on Mr. R’s non-taxable income status is Married and has 1 dependent. Then Mr. R’s effective rate category is Category B. with an income of IDR 6,200,000, the rate charged on Income Tax Article 21 is 0.25%.
Income = IDR 6,200,000
Rate = 0.25%
Income Tax Article 21: IDR 6,200,000 x 0.25% = IDR 15,500
Income Tax Article 21 withheld by Mr. R on January – November is IDR 15,500</div)
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putranto@putranto-alliance.com
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Jakarta Selatan, 12950, Indonesia
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