Deeper Outlook on Benefits-in-Kind and/or Fringe Benefits

The Government has officially issued in-kind tax rules through Minister of Finance Regulation (PMK) No. 66 Year 2023 concerning the Treatment of Income Tax for Reimbursement or Compensation for Work or Services Received or Obtained In-Kind and/or Fringe Benefits as of 27 June 2023.

This regulation is a derivative of the Law (UU) concerning the Harmonization of Tax Regulations (HPP) and Government Regulation (PP) Number 55 Year 2022.

This regulation comes into force on 1 July 2023. In principle, this regulation stipulates that every benefit-in-kind and/or fringe benefit is a tax object. Except for benefits-in-kind and/or fringe benefits included within the list of exemptions from income tax (PPh) objects.

In this regulation, the Government clarifies the definition of benefits-in-kind and/or fringe benefits. Benefits In-kind is defined as compensation received in the form of goods or non-cash which is transferred from the giver (company) to the recipient (employee).

Whereas fringe benefits are defined as compensation in the form of the right to use a facility/service which can be sourced from the giver’s (company) assets or third-party assets rented/financed by the giver.

An example of compensation in the form of benefits-in-kind would be if an athlete is contracted by a sports apparel company to advertise their product and receive compensation in the form of sports equipment. Therefore, in this case, the athlete is subjected to income tax based on the value of the sports equipment received.

In the case of fringe benefits, the income tax only applies if the value exceeds a certain threshold. For example, an employee receives an apartment from the employer. The maximum threshold given by the employer for an apartment is Rp 2,000,000, however, if the total cost of the apartment per month is Rp 3,500,000 the excess which is Rp 1,500,000 will be subject to income tax.

However, there are several exemptions for benefits-in-kind and/or fringe benefits that are exempt from being income tax (PPh) objects.

Types of benefits-in-kind and/or fringe benefits Includes Extra Definition
Food, Food Ingredients, Beverage Ingredients, and/or Beverages for all employees. Food and/or beverages that are prepared by the giver (company) at the workplace. For every employee.
Food and/or drink coupons for employees who, due to the nature of their work, cannot take advantage of the facilities at the workplace.

Includes food/drink reimbursement.

The coupon is exempt from being an income tax (PPh) object as long as:

a) Value does not exceed Rp 2,000,000 per employee/month, or

b) The value of the coupon does not exceed the value of the food and/or beverages provided at the workplace per employee/month.

Food and/or beverage ingredients for all employees with a certain limit value. The value does not exceed Rp 3,000,000 per tax year/employee.
Benefits in-kind and/or fringe benefits are provided in certain areas. Includes means, infrastructures, and facilities at the workplace for employees and their families in the form of:

a)    Residence; including housing.

b)    Healthcare

c)     Education

d)    Place of Worship

e)    Transportation as a means to carry out assignments.

f)      Sports excluding golf, motorized boat racing, horse racing, gliding, or motorsports.

As long as the business location of the employer obtains a certain area determination from the DGT.


This means, infrastructures, and/or the facility in question can be organized independently or with other parties who work together.

Benefits in-kind and/or fringe benefits that must be provided by the employer to carry out the work. Regarding the requirements by the ministries and agencies based on statutory provisions. Includes:

a)    Uniform

b)    Work safety equipment

c)     Employee shuttle services

d)    Lodging for crew members and the like

e)    Benefits in-kind and/or fringe benefits received under the context of handling an endemic, pandemic, or natural disaster

Benefits in-kind/fringe benefits that are financed by the State budget (APBN), Regional budget (APBD), and the Village revenue and expenditure budget.
Benefits in-kind and/or fringe benefits with certain types and/or thresholds. Determination of certain thresholds is based on:

a)    Types of benefits-in-kind and thresholds of benefits-in-kind in the form of recipient criteria and/or value of in-kind.

b)    Types of fringe benefits and thresholds of fringe benefits in the form of recipient criteria, value, and/or function of fringe benefits.

The difference in excess of the value received after deducting the threshold is an income tax object.

There are also certain types of benefits-in-kind and/or fringe benefits that are not subjected to being an income tax (PPh) object as long as they are within a certain threshold.

Types of benefits-in-kind and/or fringe benefits Thresholds
Gifts from employers in the form of food ingredients, beverage ingredients, food, and/or beverages for religious holidays such as Eid Al-Fitr, Christmas, Day of Silence, Vesak, and Chinese New Year. Received or obtained by all employees.
Gifts from employers that are gifted outside of religious holidays. Employees receive a value of not more than Rp 3,000,000 per taxation year/employee.
Work equipment and facilities from employers such as laptops, computers, and cellphones along with their supporting facilities such as data and internet. Received by employees and used to support work.
Health and medical service facilities from the employer. For employees who are given in order to handle:

a)    Work accident

b)    Occupational illness

c)     Life-saving emergency

d)    Treatment and follow-up treatments because of a work accident or work-related illness.

Sports facilities from the employer. Employees receive a value of not more than Rp 1,500,000 per tax year/employee. Excludes golf, horse racing, motorized boat racing, gliding, or automotive.
Communal housing facilities such as dormitories, hostels, and barracks. For employees.
Residential facilities whose utilization rights are held by individuals such as apartments or landed houses. For employees, with a maximum value of Rp 2,000,000 per month/employee.
Transportation facilities. For employees who do not have equity participation and have an average gross income of Rp 100,000,000 a month in the last 12 months.
Pension fund contribution facility (authorized by OJK) borne by employers for employees. For employees.
Religious facilities such as prayer rooms, mosques, chapels, or temples. Intended solely for worship activities.
All in-kind or fringe benefits received or obtained during 2022. Received by employees or service providers.

PT Suryacipta Swadaya (Suryacipta), a subsidiary of PT Surya Semesta Internusa Tbk (SSIA) and the developer and management of Suryacipta City of Industry and the integrated township Subang Smartpolitan held a socialization event discussing the regulation as a form of support, open to all Clients and Tenants of Suryacipta City of Industry and Subang Smartpolitan which mostly comes from the manufacturing industry.

Suryacipta held 2 consecutive seminars due to the interest regarding the topic. On July 25, 2023, Suryacipta held a joint socialization with KPP Madya and KPP Pratama Karawang that discusses the topic of regulations in general. This was followed by the seminar and webinar event on July 26, 2023, in cooperation with Partner MUC Consulting & KAP Razikun Tarkosunaryo which discussed more in-depth regarding the tax and accounting aspects of benefits-in-kind and/or fringe benefits in accordance with PMK No. 66 Year 2023.

Events such as socialization and the seminar and webinar regarding in-kind and/or fringe benefits tax are one of the facilities provided by Suryacipta in order to assist Tenants and Clients in incorporating these regulations towards their business operations. It also shows Suryacipta’ s commitment and support towards the Government program of creating “ease of doing business.” It is hoped that through events like this, potential clients and investors are attracted to place their business in Suryacipta City of Industry and Subang Smartpolitan.

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