It is stated in the Employment Law that anyone who receives income is subject to income tax. This also applies to foreign nationals (WNA) who work and/or earn income in Indonesia.

Income Tax Article 21 (PPh 21) and Income Tax Article 26 (PPh 26) are both used to calculate taxes that function to withhold employee income. The difference is that PPh 21 is used to calculate taxes for Indonesian citizens (WNI), while PPh 26 is applied to calculate taxes for foreign employees (WNA). However, whether a foreign national can be subject to PPh 21 depends on their status, specifically whether they are classified as a Domestic Tax Subject (Subjek Pajak Dalam Negeri / SPDN) or a Foreign Tax Subject (Subjek Pajak Luar Negeri / SPLN).

A. Latest Provisions for PPh 21 Withholding for Foreign Nationals (WNA)

This is further clarified under UU Law No. 7 of 2021 concerning the Harmonization of Tax Regulations.
- In general, foreign nationals who do not have a Tax Identification Number (NPWP) will be subject to PPh 26 withholding.
- Meanwhile, foreign nationals who already have an NPWP will receive the same tax treatment as Domestic Tax Subjects (SPDN), meaning that the income they receive will be subject to PPh 21 withholding.
Furthermore, referring to PER - 2/PJ/2024,
- PPh 21 reporting for SPDN must include an identity in the form of NPWP or NIK.
- If a foreign national (WNA) meets the requirements to be classified as a Domestic Tax Subject (SPDN), they have the opportunity to register for an NPWP in order to carry out income tax reporting.
- Latest Provisions for PPh 21 Withholding Rates for Foreign Nationals (WNA).

B. PPh 26 Withholding Rate

Referring to Minister of Finance Regulation (PMK) No. 168 of 2023 Article 14 paragraph (1), the withholding tax rate for Income Tax Article 26 related to employment, services, or activities is 20% and final, or it may follow the provisions of a Tax Treaty (P3B).
In this case, there are special provisions within the Tax Treaty (PER-25/PJ/2018), where employers may apply withholding tax for foreign employees according to the P3B provisions, as long as the foreign employee submits a Certificate of Domicile (SKD) for Foreign Taxpayers (WLPN).
The P3B rate applied depends on the type of income received by the respective foreign employee. The list of tax treaties can be accessed at: https://pajak.go.id/id/tax-treaty

Based on the details explained in points A and B, Gadjian has adjusted the validation concept for determining PPh for foreign employees (WNA) in all Gadjian user accounts with the following details:

Changes in how the system determines PPh 21 / PPh 26 for foreign employees (released on August 14, 2024)
- Overview of the previous concept
- Overview of the New Concept
- Currently, the Gadjian system determines the type of income tax for foreign employees (WNA) based on whether they have a Tax Identification Number (NPWP) or not. If a foreign employee in your company already has an NPWP, you can input it in the NPWP Information section under the Personal Details menu.
Addition of SKD-WPLN and SKD-WPLN Rate Fields (Released September 1, 2024)
- The use of e-Bupot PPh for reporting Monthly Income Tax Returns (SPT Masa) requires users to input the SKD-WPLN number when recording the PPh 26 withholding slip, so that foreign employees (WNA) can apply the tax rate stipulated in the Tax Treaty (P3B).
- Gadjian has now added new information fields for the SKD-WPLN number and the SKD-WPLN rate, which are determined based on the applicable Tax Treaty (P3B) rates.
- Gadjian will apply a 20% PPh 26 tax rate if no data is detected in the SKD-WPLN Rate field.
- If a foreign employee (WNA) in your company already has an SKD-WPLN, you can fill in the provided fields so that the PPh 26 calculation for the foreign employee follows the applicable Tax Treaty (P3B).