Employers Pay Full THR For Employees, Potentially Increase Tax Revenue

Illustration (Photo: Doc. Antara)

JAKARTA - The government through the Ministry of Manpower (Kemenaker) stated that employers are required to pay employee holiday allowances (THR) this year in accordance with applicable regulations.

This is stated in the Circular Number M/1/HK.04/IV/2022 concerning the Implementation of the Granting of Religious THR in 2022 for Workers/Labourers in Companies on April 6, 2022.

In it, it is written that this year's THR must be paid in accordance with the applicable laws and regulations. This includes THR payments must be made no later than seven days before religious holidays.

But do you know that the call also has a direct positive impact on the government? For information, the THR paid by employers to employees is one of the objects of taxation, specifically income tax (PPh) article 21.

In its provisions, Article 21 income tax on average is 5 percent. However, the higher the nominal value received by workers, the higher the amount of levies charged.

In general, if the number of people receiving THR increases, it will be directly proportional to the increase in tax revenue. This is also reflected in the state financial report after the momentum of Ramadan last year.

"In May 2021, the majority of the main revenue-supporting sectors recorded improved performance, supported by THR payments, dividend payments, increased imports, and improved domestic demand," said the release of the June 2021 edition of our State Budget.

In detail, PPh article 21 from January to May 2021 was recorded at IDR 64.65 trillion or 4.2 percent higher than the same period in 2020 with IDR 61.96 trillion.

One thing to keep in mind is that 2020 was the beginning of the COVID-19 pandemic, so it hit the business sector quite deeply. This condition was followed by termination of employment (PHK) which resulted in a reduction in the amount of income tax levies.

Meanwhile, in 2021, business activity will begin to improve, marked by the opening of a number of productive sectors and greater employment.

Meanwhile, 2022 is believed to be much better than the 2020 and 2021 periods with the projected number of workers returning to productive activities to increase.

In our latest APBN report, as of February this year, Article 21 income tax has been collected in the amount of Rp. 28.57 trillion. This figure jumped 18.3 percent year-on-year from 2021.