Executive Summary

Key insights and market outlook

The Indonesian government has announced an exemption from PPh 21 (Income Tax Article 21) for workers in five key sectors in 2026, as part of an economic stimulus package. The exemption, covered by PMK No. 105/2025, applies to workers earning up to Rp 10 million monthly in industries including footwear, textiles, furniture, leather goods, and tourism ¹

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Full Analysis

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Deep Dive Analysis

Indonesian Government Introduces PPh 21 Exemption for Workers in Strategic Sectors

Economic Stimulus Package for 2026

The Indonesian government has unveiled a significant economic stimulus measure by exempting workers in five key sectors from PPh 21 (Income Tax Article 21) throughout 2026 ¹

²³. This policy, formalized through Minister of Finance Regulation (PMK) No. 105/2025, aims to maintain consumer purchasing power and stabilize the economy ¹.

Eligible Sectors and Workers

The exemption targets workers in five labor-intensive industries that significantly contribute to the national economy:

Footwear manufacturing
Textiles and apparel
Furniture production
Leather and leather goods
Tourism sector

To qualify, workers must have a monthly income of Rp 10 million or less ²

. The exemption covers the period from January to December 2026, providing a full-year relief for eligible workers.

Policy Rationale

The government's decision is based on the need to:

Maintain consumer purchasing power
Support economic stabilization
Protect employment in key industries

The regulation explicitly states that this fiscal incentive is part of a broader economic stimulus package designed to enhance societal welfare ¹

³.

Implementation Details

The exemption is implemented through a government-borne income tax mechanism, where the tax burden is shouldered by the government rather than the employees or employers. This approach ensures that the benefit directly reaches the target recipients without administrative burden on businesses ²

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References