Personal Tax Relief to Rise, DGT Ready to Find New Tax Base

JAKARTA, DDTCNews – The Directorate General of Taxes (DGT) believes there is room for the government to raise the personal tax relief (penghasilan tidak kena pajak/PTKP in Indonesian) threshold.

Director General of Taxes Bimo Wijayanto said that an increase in the personal tax relief could potentially reduce tax revenue. However, he is optimistic that the potential decline in revenue can be offset through improved compliance, a broader tax base and stronger performance of the coretax system.

"Actually, we do not need to be overly concerned about this. If the government decides to raise [personal tax relief], that is perfectly fine," he told members of the media following the Ministry of Finance (MoF) media gathering, quoted on Friday (2/10/2026).

Bimo said the DGT has not yet calculated in detail the impact of a personal tax relief increase on tax revenue. This includes the potential erosion of tax revenue should the government ultimately decide to raise the personal tax relief.

"Revenue will certainly change a little. If it is decided [that PTKP rises], the consequence is that we will have to find a new tax base," he said.

According to Bimo, the DGT has also not yet received any official instruction to calculate the potential loss of revenue, particularly from income tax. Nevertheless, in parallel with discussions on the personal tax relief increase, the DGT has prepared a number of necessary scenarios.

Bimo said these scenarios have been submitted to the MoF's Directorate General of Economic and Fiscal Strategy (Direktorat Jenderal Strategi Ekonomi dan Fiskal/DJSEF in Indonesian) for further review. Subsequently, the policy framework relating to the personal tax relief increase will be discussed jointly with the Coordinating Ministry for Economic Affairs.

"As for me, I haven't been requested [to calculate the impact on revenue]. But seeing how the dialogue among the Coordinating Ministry for Economic Affairs is developing, we are ready. The scenarios have already been submitted to the DJSEF," he said.

Although simulations relating to the personal tax relief increase have been prepared, Bimo was not willing to disclose the details to the public. He said there are a number of factors that need to be taken into account when assessing the impact of changes to the personal tax relief on tax revenue.

One of these is the revenue contribution from individual taxpayers in the highest income tax rate bracket.

"If you look at it by decile, naturally those in the highest decile contribute the most, because our [income tax] rates are progressive. So the contributors are definitely those in the decile whose income tax payments exceed 10%; those in the [lowest] 5% [income tax bracket] still contribute very little," said Bimo.

For information, personal tax relief is a deduction from net income for individual taxpayers in determining the amount of taxable income.

Personal tax relief was first regulated in 1984 and has been amended on several occasions. Currently, the provisions governing the amount of personal tax relief are set out in MoF Reg. 101/2016. See Personal Tax Relief Set to Rise? Changes Since 1984

The idea of raising the personal tax relief threshold was first raised by Coordinating Minister for Economic Affairs Airlangga Hartarto. He stated that the government is discussing plans to adjust the personal tax relief by taking into account inflation developments.

"There was discussion earlier about improving the PTKP figure to adjust it to the inflation rate. We are currently calculating this together with the minister of finance," said Airlangga. (dik)