Jakarta. Indonesia has earmarked Rp 494 billion or roughly $28.7 million to cover the Article 21 income tax of workers in strategic sectors this year.

This policy is an expansion of a similar relaxation implemented last year to maintain public purchasing power. The incentive targets workers in textile, footwear, apparel, furniture, leather goods, and tourism — all industries with high labor absorption but are vulnerable to economic fluctuations. The latest figure marks a huge jump from last year’s incentives. Indonesia had set aside Rp 395 billion (almost $23 million) in government-borne Article 21 income tax, and had spent Rp 383 billion (nearly $22.3 million) by the end of the year.

“We have set the ceiling for the incentive at Rp 494 billion this year,” Inge Diana Rismawanti, a senior official at the taxes directorate general, told reporters in Nganjuk on Friday.

Inge said that the government had decided to extend the program and raise the budget following huge interest. She added: “We hope businesses can take advantage of this fiscal relaxation until December 2026.”

This scheme exempts eligible workers’ gross income from tax deductions, thereby allowing them to receive their wages in full. Employers are required to pay the incentive in cash to workers at the time of payroll. Article 21 income tax has employers withhold a portion of the workers’ salaries and pay the tax to the state treasury on their behalf.

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