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Tax trap for medical doctors: A crisis in fairness
The taxation system imposed on Indonesian doctors is not only burdensome, but also contains structural anomalies that contradict the principles of tax fairness.
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An eye doctor examines a patient during a free public health screening event on March 27, 2024, in Dangin Puri Kauh village, Denpasar, Bali. (Antara/Nyoman Hendra Wibowo)
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cross the world, doctors are regarded as the backbone of public health. They sacrifice time, energy and even their own well-being to save lives. However, in Indonesia, the recognition of doctors is not only lacking in terms of compensation and job protection, but also in a tax system that treats them as cash machines for the state.
As a doctor with experience in managing hospital finances, I have observed that the taxation system imposed on Indonesian doctors is not just burdensome but also contains structural anomalies that contradict the principles of tax fairness.
In 2023, the Finance Ministry issued Regulation No. 168/2023 (PMK 168/2023), requiring hospitals to withhold 5 percent tax from doctors’ gross income before they even receive their earnings.
At first glance, this policy seems reasonable. However, its implications are far reaching: Doctors' gross income appears inflated in annual tax reports, even though they only receive a portion after revenue sharing with hospitals.
Doctors who should fall into lower tax brackets suddenly move into higher progressive tax categories.
There is no mechanism for operational cost deductions, such as purchasing personal medical equipment, continuing medical education or professional licensing fees.
Under this system, doctors are forced to pay taxes on income they never actually receive.
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