Final PPh Article 21 on Lump‑Sum Severance Pay: Progressive Rates

Final Article 21 tax is applied to severance pay paid in a lump sum, as stipulated in Government Regulation No 68/2009 and Ministerial Regulation No 16/2010. The rule governs tax on severance paid within a maximum of two calendar years. It was released on 15 October 2025.

A final tax means the withheld amount is considered settled and cannot be credited in the annual tax return. When the severance, in whole or in part, is paid within two calendar years, progressive rates of 0 % to 25 % apply to the cumulative gross amount. Payments made after the third year are taxed under Article 17 rates and may be credited.

Employers must withhold the tax at the time of payment or when transferring funds to the severance fund manager. Employees cannot claim a refund for the final tax, except for portions paid after the two‑year period. The provision influences termination planning and the tax burden for businesses. Read the full source at news.ddtc.co.id (https://news.ddtc.co.id/literasi/kelas-pajak/1814459/pph-pasal-21-final-atas-pesangon-yang-dibayarkan-sekaligus).