TaxSavvyID

Paying a freelancer as an individual

Kami bayar freelancer perorangan. Potong PPh 21 atau 23?

The situation

Payments to resident individuals who are not employees bear PPh 21 non employee withholding, not PPh 23.

The law

  • Art 21, Law 7/1983 on Income Tax (PPh Law), as last amended by Law 6/2023: Employers withhold tax on wages and other pay to resident individuals; the rate is 20 percent higher for payees without an NPWP
  • PMK 168/2023 on Article 21 and 26 withholding: Procedures for PPh 21 and 26 on employment and other pay, including TER categories A, B and C and the year end recalculation

What it means for you

PMK 168/2023 applies 50 percent of gross as the base for non employees, then Art 17 rates. Example: fee IDR 10,000,000: base IDR 5,000,000 at 5 percent = IDR 250,000. If the freelancer uses the 0.5 percent final scheme with proof, withhold 0.5 percent final instead.

What to do

  1. Check if the payee is an individual.
  2. Ask for proof of the final scheme if any.
  3. Compute PPh 21 non employee.
  4. Issue the slip.

Using PPh 23 for individuals is wrong and the slip will not match.

We can do this for youMonthly payroll tax (PPh 21 and 26) with TER rates, December true up and annual slips: IDR 2.750.000

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