Accounting Research Festival 2025 P-ISSN: x-x.
E-ISSN: x-x Website: https://publikasiilmiah.
id/fra4 Redefining Accounting Education: Balancing Technological Innovation with Ethics and Sustainability Study on the Implementation of the Average Effective Rate (TER) of Income Tax Article 21 Agnes Arie Mientarry Christie1*.
Rini Hastuti2.
Agnes Advensia Chrismastuti3.
Apelina Teresia4 1 Accounting Department.
Soegijapranata Catholic University.
Semarang.
Indonesia.
Email:
agnes@unika.
2 Accounting Department.
Soegijapranata Catholic University.
Semarang.
Indonesia.
Email:
rien@unika.
3 Accounting Department.
Soegijapranata Catholic University.
Semarang.
Indonesia.
Email:
a_advensia@unika.
4 Accounting Department.
Soegijapranata Catholic University.
Semarang.
Indonesia.
Email:
apelina@unika.
ABSTRACT
The enactment of Government Regulation No.
58 of 2023 concerning the withholding rates of Article 21 Income Tax on income derived from employment, services, or activities by individual taxpayers introduces a simplified approach to the technical calculation and administrative procedures of tax deductions.
This study aims to evaluate the effectiveness of the regulationAos implementation and to identify potential challenges arising from the transition in calculation methods.
The findings are intended to inform recommendations, preventive strategies, and planning measures to mitigate foreseeable issues.
The research involves collecting data on salaries, wages, and honorariums paid to permanent employees Using this dataset.
Article 21 Income Tax is calculated and compared across periods using both the Traditional Progressive Rate and the Average Effective Rate (TER) method.
Keywords: Income Tax Article 21.
Progressive Rate.
Average Effective Rate.
INTRODUCTION
Taxes are the primary source of state revenue that supports our State Budget (APBN).
State revenues from the tax sector reached Rp 1,869.
23 trillion, out of a total of Rp 2,774.
30 trillion in State Revenue and Grants as of December 31, 2023.
Table 1.
Tax Revenue Realization in 2023 Source: APBN Kita Publication.
January 2024 Edition Proceeding Accounting Research Festival | 311 Because state revenues sourced from non-oil and gas income tax are dominated by Corporate Income Tax.
Article 21 Income Tax, and Final Income Tax, the government's special attention to these sources of state revenue is one of the government's focuses in making tax-related policies.
With the implementation of the Average Effective Rate (TER), it is hoped that the ease in calculating Article 21 Income Tax for Taxpayers who make Article 21 Income Tax deductions can be achieved and it is hoped that in the future it will increase taxpayer compliance in carrying out one of their tax obligations, namely Article 21 Income Tax deductions.
This study focuses on how the implementation of regulations related to TER is expected to facilitate the calculation of Article 21 Income Tax for each tax period .
, but for the annual or real calculation of employee income in 1 tax year there is no change.
The calculation of Article 21 Income Tax for each period in the old method calculation is indeed quite complicated, especially if the salary components vary or are not the same for each month, such as the salary components of employees in Higher Education, in this case teachers or lecturers, where each month it is possible to receive other income outside the basic salary such as bonuses, tantiem or performance income.
THR.
Excess Workload and so on.
However, even though it is quite complicated, the calculation of Article 21 Income Tax using the old method is quite close to the accuracy of the calculation because the old calculation method is based on the real calculation of one month which is annualized for regular income and the addition of irregular income and calculates Article 21 Income Tax according to the Article 17 Income Tax rate according to the calculation of Article 21 Income Tax at the end of the year.
While the TER method uses an average effective rate so that the rate will not produce a real value but in terms of calculation it really makes it easier for the PPh Article 21 Withholding Agent.
Here the researcher wants to see how far the difference that arises from the TER calculation is, whether it is large enough where it will burden employees at the end of the year if there is a large underpayment difference, or vice versa if at the end of the year the potential for a large overpayment can occur because when receiving irregular income that is quite high then the TER rate is also quite high which burdens employees, in this case if there is an overpayment of Article 21 income tax for the 21 income tax withholder will also leave an additional task, namely calculating prepaid taxes on the payroll system for the following month, it could even be possible for the next 2 .
This research is a case study that will be conducted at the Bahagia Foundation, a corporate taxpayer in Central Java that provides income to individuals for services, work, and activities that are subject to Article 21 Income Tax.
The Bahagia Foundation has a total of 485 employees consisting of permanent and non-permanent employees.
This number is certainly not a small number in calculating the amount of tax imposed on employees.
The convenience of the Average Effective Rate is expected to simplify tax However, whether the overall implementation of PP 58 of 2023 is truly easier and does not cause new problems in the future deserves to be research material, especially on the deduction of Article 21 income tax in the payroll system.
Literature Review Traditional Progressive Rates The government has amended regulations and technical guidelines related to Income Tax several times, resulting in changes to the calculation of Article 21 Income Tax, which must be adjusted to comply with applicable regulations.
This began with Regulation of the Director General of Taxes Number PER 16/PJ/2016 concerning Technical Guidelines for the Withholding.
Remitting, and Reporting of Article 21 Income Tax and/or Article 26 Income Tax in Connection with Employment.
Services, and Activities of Individuals.
This regulation contains several technical guidelines for calculating Article 21 Income Tax.
Average Effective Rate (TER) Government Regulation of the Republic of Indonesia Number 58 of 2023 regulates the Average Effective Rate (TER) as the basis for calculating Income Tax Article 21, replacing the previous regulation.
This regulation came into effect on January 1, 2024, and aims to simplify tax calculations.
This regulatory change will certainly lead to changes in tax calculations.
In Government Regulation Number 58 of 2023, the Average Effective Tariff (TER) is divided into two groups: Monthly TER and Daily TER.
The use of TER is mandatory, not optional, and is carried out in accordance with applicable regulations.
Monthly Effective Rate This rate is categorized based on the amount of Non-Taxable Income (PTKP) according to the taxpayer's marital status and number of dependents at the beginning of the tax year.
The Monthly TER is divided into three categories: Category A.
Category B, and Category C.
Proceeding Accounting Research Festival | 312 A The Monthly Effective Rate for Category A applies to individual taxpayers with PTKP statuses TK/0.
TK/1, and K/0.
A The Monthly Effective Rate for Category B applies to individual taxpayers with PTKP statuses TK/2.
TK/3.
K/1, and K/2.
A The Monthly Effective Rate for Category C applies to individual taxpayers with PTKP status K/3.
Efficient Tax Administration Theory Shagari & Saad .
stated that tax revenues in developing countries are mostly derived from corporate income tax, compared to personal income tax.
Therefore, it is crucial that tax systems and tax policies are properly designed and continuously monitored so that governments can optimize tax revenues.
Efficient tax administration reduces costs while providing better services to the public (OECD, 2.
Good tax administration is a prerequisite for ensuring high compliance and managing tax policies effectively and Some factors that hinder tax administration include the inability to prioritize efforts by some tax agencies, poor administrative efficiency, failure to file tax returns, misreporting of income or allowable deductions from taxable income (Serkan.
Tamer.
Yuzba & Mohdali, 2.
Stephen.
Ayodotun.
Iyoha.
Charles & Deniel, 2017.
Shagari & Saad, 2.
An overloaded tax system with numerous taxes, many of which overlap, results in poor or inefficient tax administration.
Tax revenue can be increased by establishing an effective tax administration.
Efficient tax administration requires tax policy and administration reform, modern and efficient tax processes, and competent staff.
Effective tax administration must take into account the relationship between employees, taxpayers, the regulatory framework, and the environment and global changes (Shagari & Saad, 2.
The Efficient Tax Administration Theory focuses on how the tax process can be simplified and made more efficient.
Therefore, this study uses this theory to analyse government policies related to TER, which aims to reduce complexity in tax calculations.
The TER implementation process at the Bahagia Foundation will be evaluated to determine whether it is in accordance with its objective, namely to make tax administration more efficient.
Therefore, this theory is very suitable to be used as a supporting theory for the analysis results related to increasing tax administration efficiency and reducing administrative burdens at the Bahagia Foundation after the implementation of TER.
Tax Planning Theory Kouroub & Lahsen .
argue that tax planning is a series of tax avoidance strategies, with entirely legal activities on one side and more aggressive activities on the other.
Thus, tax planning is a broad term encompassing all practices aimed at reducing a company's tax burden, both legal and illegal, ranging from tax optimization to tax avoidance.
This concept can encompass both tax optimization and tax management, which relate to the tax consequences of each objective or action undertaken by the company.
Therefore, tax planning is considered a series of practices that tend to reduce the present value of tax payments and generally increase the tax rate (Kouroub & Lahsen, 2.
This understanding aligns with tax planning by Pohan .
, who states that tax planning is the process of organizing the efforts of individual and corporate taxpayers to plan their taxes in such a way as to exploit various loopholes that may be exploited by the company within the scope of tax regulations, so that taxpayers can pay the minimum amount of tax (Rezeki, 2.
The Tax Planning Theory in this study is used to strengthen the analysis of the impact of TER implementation on tax planning at the Bahagia Foundation.
The new regulation in calculating Income Tax Article 21, namely TER, will impact the amount of tax burden borne by the company.
Therefore, adjustments to its tax planning strategy are definitely needed, particularly in managing payroll and employee tax obligations.
This research is expected to produce outputs in the form of recommendations regarding tax planning strategies that can be implemented by the Bahagia Foundation.
Therefore, the Tax Planning Theory in this study will explore how companies can optimize tax burden management with the TER policy.
Previous Research Nawangsari and Widajantie .
conducted a study comparing the calculation of Article 21 Income Tax using the Average Effective Rate (TER) scheme with the old rules for permanent employees who are clients of a Tax Consultant Firm.
Nawangsari1 and Widajantie .
used a comparative method to analyze the theoretical review of the Article 21 Income Tax calculation method, simulate calculations using both methods, and evaluate their impact.
The results of the study indicate that implementing the TER scheme can simplify the process of calculating Article 21 Income Tax and improve tax administration efficiency, although proper socialization and understanding are still needed to optimize tax compliance.
Proceeding Accounting Research Festival | 313 Sari and Suprihandari .
also conducted an analysis comparing the Article 21 Income Tax withholding rates at PT Maheswari Daya Gemilang.
Research by Sari and Suprihandari .
shows that the implementation of the Average Effective Rate (TER) causes an increase in the tax burden borne by employees by 2.
5%, resulting in a decrease in take-home pay or net income received by employees.
However, the implementation of TER also has a positive impact because its implementation is easier and more efficient because the TER rate system facilitates faster and more accurate tax calculations.
Meanwhile, research by Yolanda and Sulistyowati .
also analyzed the calculation of Income Tax Article 21 before and after using the effective rate according to PP 58/2023.
Yolanda and Sulistyowati .
used a qualitative descriptive method by collecting data and information from various sources.
The results of Yolanda and Sulistyowati's .
research found different results from Sari and Suprihandari's .
research, namely that with the implementation of the Average Effective Rate (TER), the monthly tax imposed on individual taxpayers becomes lower.
In line with Yolanda and Sulistyowati .
Annisa et al.
in their research also found that the implementation of PP 58 of 2023 on the deduction of Article 21 Income Tax at PT.
X had a positive impact.
This is evident in the average withholding of Article 21 Income Tax, resulting in an increase in the average income received by employees.
Meanwhile, for the company, calculating Article 21 Income Tax for the tax period becomes easier or more concise because it eliminates the need to calculate deductions and VAT for the following year, as well as the tax amount.
RESEARCH METHOD
This research will use a mixed methods approach with a case study of a corporate taxpayer in Central Java.
Quantitative Approach: Quantitative analysis is used to measure the effectiveness of payroll management in relation to the use of traditional progressive rates versus TER, which has been in effect since the 2024 tax year.
Qualitative Approach: Conducted to gain in-depth insight into the practices and experiences in managing payroll systems with different Income Tax Article 21 rates.
This approach is used to explore or uncover the reasons, facts, and stories that occurred in the payroll system before and after the implementation of the Income Tax Article 21 rate changes.
The research was conducted at the Bahagia Foundation, a corporate taxpayer in Central Java with 485 permanent employees.
Bahagia Foundation also generates income from services, work, and other activities from individuals, and therefore is subject to withholding of Income Tax.
Data Type The use of mixed methods analysis to generate data needs is divided into two types.
Primary Data: data collected directly from data sources.
This includes observations of the work environment at the research location and interviews with informants, both those directly involved in the payroll system .
perators or payroll staff and tax staf.
, and those not directly involved, such as immediate superiors .
ow-level manager.
, middle managers .
iddle manager.
, and top managers .
op manager.
Secondary Data: data related to the company's payroll system, such as employee payroll lists, employee tax returns, and payroll standard operating procedures (SOP.
Data Collection:
Data for analysis was collected through the following methods:
Observation: Researchers observed the atmosphere and working conditions of the Bahagia Foundation to capture moments and events that could complement and/or enrich the qualitative This observation is crucial to address the research objectives related to evaluating the implementation of TER in the payroll system and capturing opportunities for tax planning.
Documentation: Collecting payroll data for both permanent and non-permanent employees and others during 2024.
This data will serve as the primary data that will be processed to determine the effectiveness of calculating Article 21 Income Tax with the new rate (TER) compared to the old rate .
rogressive proportiona.
Proceeding Accounting Research Festival | 314 Interviews: Semi-structured interviews were conducted to explore in detail the constraints, problems, challenges, and benefits of both rate systems based on practical experience.
The subjectivity of the interviewees will be explored to serve as material for formulating an implementation evaluation and designing a tax planning system for TER implementation.
Data Analysis Techniques:
Payroll data in the form of figures and rates will then be processed using quantitative descriptive methods to determine the effectiveness of the tax calculation and deduction system.
Qualitative descriptive analysis methods will also be used on data from interviews and observations.
Qualitative analysis is necessary to understand the weaknesses, strengths, threats, and opportunities based on the foundation's practical experience in implementing TER compared to traditional progressive rates.
Based on the situational and potential analysis, payroll tax planning can be determined in relation to the implementation of TER.
RESULTS AND DISCUSSION
Tax calculation is calculated using the old method based on PER 16 of 2016 where the calculation of Article 21 Income Tax every month is calculated by calculating the net income of one month which is annualized, reduced by the annual PTKP, subject to the Article 17 Income Tax rate where the Article 21 Income Tax is obtained for 1 .
year then divided by 12 .
months to obtain the Article 21 Income Tax for 1 .
The following is a table of Gross Income each month from 41 .
orty-on.
employee samples taken.
From the calculation using the old method, it was found that the average burden of withholding Income Tax Article 21 was for each month, but was large at the end of the year or in December, this was because in December there was irregular income in the form of Holiday Allowances (THR).
From the calculation results of Income Tax Article 21 using TER, it was obtained that in December there were several employees who experienced Overpayments, this could be caused by the Average Effective Rate being an average rate, so it does not show accurate results in calculating Income Tax Article 21, if an employee's Gross Income is at the beginning of a range of a tariff layer, the accumulated calculation in December will experience an Overpayment, but if an employee's Gross Income is at the end of a range of a tariff layer, the accumulated calculation of Income Tax Article 21 at the end of the year will experience an Underpayment.
Therefore, when comparing the calculation results between the Old Method and the New Method (TER), the following results will be obtained:
Proceeding Accounting Research Festival | 6 13 Table 2.
2024 Happy Foundation Employees' Gross Income Table PTKP
TK/1
K/0
TK/2
TK/0
K/2
TK/1
TK/2
TK/0
TK/2
K/0
K/2
TK/2
TK/0
K/2
TK/0
K/2
TK/0
TK/0
TK/0
TK/2
TK/0
TK/0
K/2
TK/0
TK/0
TK/0
TK/1
TK/1
TK/2
TK/0
K/1
TK/2
TK/2
TK/1
K/0
TK/0
K/3
K/2
K/2
TK/0
TK/0
Gross
Income
Old Method
JAN-NOV
DES
% DES
New Method
JAN-NOV
DES
% DES
-1%
-1%
-4%
-1%
-2%
Source: Bahagia Foundation, 2024 From the comparison table above, the average percentage of Article 21 Income Tax burden on Employee Income in December is smaller if using the Average Effective Rate (TER).
In the calculation process, using TER makes it easier to calculate the amount of Article 21 Income Tax, but it will be a little more difficult if there is irregular income received in certain months which results in changes in the amount of the rate charged on income in that month.
The Bahagia Foundation is aware of this so that in the calculation process, irregular income is taxed based on the average Article 17 rate layer of the employee concerned at the end of the tax year, but the temporary calculation is only done internally, for reporting, the Bahagia Foundation reports all irregular income in December with appropriate rate adjustments according to the calculation of Article 21 Income Tax in real terms or total income with the real tax payable, this information was obtained based on the results of interviews with the Treasurer who handles the calculation of Article 21 Income Tax on a monthly basis.
Proceeding Accounting Research Festival | 6 13 The results of this study are generally consistent with previous studies and the results of two umbrella studies under this research.
Nawangsari and Widajantie .
conducted a study comparing the calculation of Income Tax 21 using the Average Effective Rate (TER) scheme with the old rules for permanent employees who are clients of a Tax Consultant Firm.
Nawangsari and Widajantie .
used a comparative method to analyze the theoretical review of the Income Tax 21 calculation method, simulate calculations using both methods, and evaluate their impact.
The results of this study indicate that the implementation of the TER scheme can simplify the process of calculating Income Tax 21 and improve the efficiency of tax administration, although proper socialization and understanding are still needed to optimize tax compliance.
Sari and Suprihandari .
also conducted an analysis comparing Article 21 Income Tax withholding rates at PT Maheswari Daya Gemilang.
Their research showed that the implementation of the Average Effective Rate (TER) resulted in a 2.
5% increase in employee tax burden, resulting in a decrease in take-home pay or net income received by employees.
However, the implementation of TER also had a positive impact because its implementation was easier and more efficient because the TER rate system facilitated faster and more accurate tax calculations.
Meanwhile.
Yolanda and Sulistyowati's .
research also analyzed the calculation of Article 21 Income Tax before and after using the effective rate according to PP 58/2023.
Yolanda and Sulistyowati .
used a qualitative descriptive method by collecting data and information from various sources.
The research results of Yolanda and Sulistyowati .
found different research results from Sari and Suprihandari .
, namely that by implementing the Average Effective Rate (TER), the monthly tax imposed on individual taxpayers becomes In line with Yolanda and Sulistyowati .
Annisa et al.
in their research also found that the implementation of PP 58 of 2023 on the deduction of Article 21 Income Tax at PT.
X had a positive impact.
This is evident in the average withholding of Article 21 Income Tax, resulting in an increase in the average income received by employees.
Meanwhile, for the company, calculating Article 21 Income Tax for the tax period becomes easier or more concise because it eliminates the need to calculate deductions and VAT for the following year, as well as the tax amount.
Critical Review The Indonesian government implemented an average effective rate (TER) in calculating Income Tax Article 21 (Income Tax on employment incom.
to simplify and streamline tax calculations, particularly for employers .
in calculating and withholding employee Income Tax Article 21.
This change was expected to have a positive impact on Indonesia's tax administration system.
However, implementing the TER for calculating Income Tax Article 21 has proven to be less straightforward than expected, particularly for volatile income such as bonuses, holiday allowances, or gifts.
This is the situation experienced by the Bahagia Foundation.
The calculation of Article 21 Income Tax on employee income at the Bahagia Foundation before and after the TER implementation yields approximately the same value.
However, in terms of calculation systematics, payroll employees at the Bahagia Foundation find it easier to use the old calculation scheme.
This is because the Income Tax rate used is fixed, independent of the amount of gross income earned.
Thus, payroll employees only need to enter the figures according to the calculation formula.
Meanwhile, the rate used in TER calculations can change depending on the gross income received.
This means that calculations must always be carried out by adjusting the gross income value.
Furthermore, the Income Tax rate under the TER scheme must be adjusted to the PTKP of the income recipient.
Even though the gross income received is the same, the TER rate used can differ if the PTKP of the income recipient is also different.
Proceeding Accounting Research Festival | 4 13 Evaluation Increased discoverability of research and high-quality peer review are ensured by online links to the sources cited.
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TER Effectiveness In the final results, the calculation of Article 21 Income Tax before and after the implementation of TER at the Bahagia Foundation showed more or less the same results.
This indicates that the use of TER does not significantly differ in the amount of tax payable by employees.
However, unfortunately, the expected benefits of TER implementation, namely tax administrative efficiency, were not felt by implementers in the field.
TER Operational Complexity One of the challenges experienced by payroll staff is that the TER system is more complex than the previous method.
In the previous method, the Income Tax rate was fixed and could be applied directly through a formula, without requiring adjustments to the gross income each month.
TER requires rate adjustments based on monthly gross income and consideration of PTKP status, which varies among individuals.
This creates a higher level of complexity, especially when the number of employees is large and gross income fluctuates monthly.
Implications for Administrative Efficiency Although TER is intended to simplify processes, in the case of the Bahagia Foundation, the system is actually perceived as being more inefficient.
This indicates a gap between policy objectives and technical implementation in the field.
Reliance on a changing tariff table and the need for manual adjustments to PTKP status adds to the administrative burden and increases the potential for data input errors.
Dependence on Systems and Human Resources Using the TER scheme requires human resources with a deep understanding of technical details and high accuracy in calculations.
Without the support of an information technology system or payroll application, the use of TER can lead to decreased work efficiency.
Based on the evaluation results above, here are some recommendations that the Bahagia Foundation can implement:
Re-evaluate Internal Needs and Capabilities The Bahagia Foundation should conduct an internal evaluation of the number of employees and their income variations.
This will relate to the ability of payroll staff to understand and implement TER.
If the old method is deemed more administratively efficient and still complies with tax regulations, then there is no absolute obligation to implement TER.
The Bahagia Foundation may choose to continue using the normal method .
rogressive rat.
as stipulated in the regulations.
Proceeding Accounting Research Festival | 8 13 Use a Payroll Application or Software To reduce the manual complexity of using TER, the Bahagia Foundation is recommended to use a payroll application integrated with Income Tax Article 21 and TER features.
This system is expected to automatically adjust TER rates based on gross income and PTKP status, thereby reducing manual workload and the risk of errors.
Improve Payroll Human Resources Capacity The Bahagia Foundation may provide training or workshops for payroll staff on understanding the TER concept, the use of tax calculation tools .
anual or digita.
, and applicable tax regulations.
With increased capacity, payroll staff will be more comfortable and confident in using any scheme, including TER.
Create Internal Guidelines or Payroll SOPs The Bahagia Foundation can develop Standard Operating Procedures (SOP.
or internal technical guidelines for calculating Article 21 Income Tax, using both TER and the progressive method.
This aims to provide consistent guidance for payroll staff, ensuring consistent monthly calculations and reducing the risk of administrative errors.
CONCLUSION
Comparison of the calculation of Income Tax Article 21 for Foundation Bahagia employees using the Old Traditional Progressive Rate Method compared to using the New Method of Average Effective Rate (TER) from a calculation perspective, it actually does not show a significant difference in each month's average, the difference between Income Tax Article 21 which still has to be paid in December is both quite large in December, considering that Foundation Bahagia in distributing THR always coincides with the month of December, so the use of the Old Method and the New Method does not show a significant difference.
In terms of ease of management, the TER Scheme can simplify the Income Tax Article 21 calculation process and increase the efficiency of tax administration.
However, the implementation at the Bahagia Foundation is not easy because in some tax periods employees receive different irregular income, so changes in the TER rate range will also change in each period, so there are advantages and disadvantages to each method, for the Old Method the calculation seems more difficult because it is more detailed but the final results will show the accuracy of the tax calculation, while for the New Method it will make the calculation easier but the determination of the rate can also change for each employee each month.
The Bahagia Foundation has used the New Method with Average Effective Rates (TER) in calculating Income Tax Article 21 on employee salaries, however in practice its implementation in reporting is not in accordance with the time of receipt in order to facilitate the determination of tax rates on income received irregularly.
The Bahagia Foundation needs to consider investing in a payroll system or application that can calculate Income Tax Article 21 based on the TER scheme automatically, making it easier to calculate Income Tax Article 21 every month by taking into account the characteristics of employee receipts which are quite fluctuating each month.
The government and the Directorate General of Taxes (DGT) need to pay attention to feedback from implementers in the field and perhaps provide application support or additional technical training, especially to accommodate taxpayers who receive irregular income which results in changes in rates to ensure that the TER scheme really makes it easier, not more difficult for taxpayers, in calculating their taxes.
Proceeding Accounting Research Festival | 8 13
REFERENCES