Minister of Manpower Yassierli has confirmed that holiday allowance (THR) for private sector workers in 2026 remains subject to income tax under Article 21. The government has set a payment deadline of no later than seven days before the religious holiday, and it must be paid in full without installments. Proposals for tax exemption from labor groups are still under further review.
Jakarta, March 5, 2026 – Holiday allowance (THR) is in the spotlight ahead of Eid al-Fitr, particularly regarding tax obligations and payment schedules. Minister of Manpower Yassierli stated that THR for 2026 remains subject to Income Tax (PPh) Article 21, in line with applicable regulations. This was conveyed after a press conference at the Coordinating Ministry for Economic Affairs office in Jakarta on Tuesday.
"In accordance with the regulations," said Yassierli, responding to proposals from labor groups to exempt THR from tax. He added, "(The proposal) must be studied further, yes." By regulation, THR is part of employee income that falls under PPh Article 21. This is based on PER-16/PJ/2016, Government Regulation No. 58 of 2023, and Minister of Finance Regulation No. 168 of 2023. Tax deductions are handled by the employer, so workers receive net THR after withholding.
Some workers have complained about the significant tax deductions, as THR is paid alongside monthly salaries, increasing total monthly income and thus the progressive tax rate.
In addition to tax rules, the government, through Ministerial Circular No. M/3/HK.04.00/III/2026, has confirmed the THR payment deadline. Companies must pay it no later than seven days before the religious holiday, though earlier payment is recommended. "We request THR to be paid at the latest, companies are urged to do it faster," Yassierli said on March 3, 2026.
This obligation is governed by Government Regulation No. 36 of 2021 on Wages and Minister of Manpower Regulation No. 6 of 2016. Furthermore, THR must be paid in full and cannot be installment. "In addition, religious THR must be paid in full by employers and cannot be installment," he emphasized. These rules aim to ensure workers receive their rights on time for holiday needs.
