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Fringe benefits from cars to houses to count as taxable income
Based on a recently passed law, the plan to tax non-wage compensation is aimed at expanding tax-collection efforts.
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A banner shows a message urging taxpayers to submit their returns. (JP/R. Berto Wedhatama)
T
he government has announced its intention to tax facilities or benefits obtained from companies in an effort to increase tax revenue.
Yon Arsal, a tax-compliance expert at the Finance Ministry, said these benefits would be classified as an individual’s taxable income along with their salary, causing an increase in tax obligations.
The provision is part of the Harmonized Tax Law passed in October and signed by President Joko “Jokowi” Widodo on Oct. 29. According to the tax office, it is slated to take effect in 2022, meaning facilities obtained next year would be subject to the fringe benefit tax.
“So, these facilities could be classified as income,” Yon said during a media gathering held by the tax office in Bali.
Read also: New tax law expected to raise tax revenue by at least 9%
Previously, the facilities were not seen as income, despite being granted to employees and managers among the stakeholders of a company to improve their livelihoods on top of their salaries. Recipients were not obliged to take them into account in their annual tax returns.
This includes beneficial owners of companies who can obtain goods for personal use through the enterprises, effectively making them wealthier without being subject to additional tax obligations.
