How to Compute Income Tax (PPh 21) for New SPDN Employees

The DDTC tax class outlines how to calculate Income Tax (PPh 21) for permanent employees who become Subjek Pajak Dalam Negeri (SPDN) after the start of the year, such as foreign workers hired in September 2024. The illustration uses Mr. Charles, a Dutch national employed by PT Z with a salary of Rp15 million per month starting 1 September 2024.

Under Article 2 paragraph (3) of the Income Tax Law, a person is classified as SPDN if they reside in Indonesia, stay more than 183 days within 12 months, or intend to settle permanently. When SPDN status begins after January, PPh 21 is computed using the monthly tax rate (TER) for each regular period, and for the final period the net annualized income is applied proportionally to the months worked.

This approach ensures accurate tax withholding for newly resident employees and assists employers in meeting their withholding obligations. Employers must adjust calculations from the first month of work through year‑end to avoid over‑ or under‑payment of tax.