The government is preparing a number of tax policies for 2027, including the continuation of the government-borne Article 21 income tax (PPh 21 DTP) incentive, an adjustment to the non-taxable income threshold (Penghasilan Tidak Kena Pajak/PTKP), and government-borne value-added tax (VAT) facilities for the housing sector. The government also plans to expand the Article 21 income tax incentive to cover all sectors.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the government was still discussing the implementation schemes and budget requirements for the various policies.
Airlangga made the statement after attending a limited meeting with President Prabowo Subianto at the Presidential Palace Complex in Jakarta on Wednesday (Sept. 30, 2026).
Article 21 Income Tax Incentive to Cover All Sectors
The government plans to extend the government-borne Article 21 income tax incentive for workers earning up to IDR 10 million per month in 2027. The incentive was previously provided to workers in labor-intensive industries and the tourism sector. Next year, the government plans to expand eligibility to workers across all sectors.
The government estimates that around 7.5 million workers will benefit from the expanded incentive.
“This will be continued next year and will benefit around 7.5 million workers,” Airlangga said.
Non-Taxable Income Threshold to Be Adjusted
In addition to the income tax incentive, the government is reviewing an adjustment to the non-taxable income threshold, taking inflation developments into consideration. Airlangga is conducting the review together with Finance Minister Suahasil Nazara. However, the new threshold has yet to be determined as the government is still calculating the appropriate amount.
The adjustment to the non-taxable income threshold will be part of the tax policies being prepared for 2027.
Housing VAT Incentive to Continue
The government also plans to maintain the government-borne VAT facility for the housing sector next year. The facility will apply to home purchases priced at up to IDR2 billion. For homes priced up to IDR5 billion, the government-borne VAT facility will apply to the first IDR2 billion of the purchase price.
The policy is among the incentives the government plans to continue to support the housing sector.
VAT Rules for Gold
The government is also preparing changes to tax provisions for the jewelry and precious metals industries. One of the proposed changes concerns the purity threshold for gold eligible for the VAT facility. The threshold is planned to be lowered from 99.99% to 99.9%.
The adjustment will be introduced through an amendment to a government regulation.
Subsidized Mortgages to Be Expanded
Beyond tax policies, the government is preparing to expand the subsidized mortgage program (KPR) to formally employed individuals earning around IDR 17 million per month. Under the proposed scheme, eligible recipients could obtain mortgages at an interest rate of 6% for homes priced at up to IDR 500 million.
The scheme was previously targeted at micro, small, and medium-sized enterprise (MSME) operators with irregular incomes. The government is now preparing to expand eligibility to individuals with fixed incomes.
Job Loss Benefits to Be Adjusted
The government is also discussing adjustments to several worker protection programs, including work accident insurance (Jaminan Kecelekaan Kerja/JKK), death insurance (Jaminan Kematian/JKM), and job loss insurance (Jaminan Kehilangan Pekerjaan/JKP). For job loss insurance, the government is preparing a six-month benefit scheme, with benefit amounts adjusted based on workers’ wage brackets.
The benefit amounts are still being discussed with the Ministry of Finance.
Apprenticeship and Vocational Programs
Workforce skills development programs will also continue in 2027. Through the Ministry of Manpower, the government is targeting 150,000 participants for its apprenticeship program. Meanwhile, the vocational program is expected to reach 300,000 participants.
Both programs are aimed at improving workers’ skills and competencies.
Budget Requirement Estimated at IDR 31 Trillion
The Ministry of Finance is still calculating the budget required for various programs to be continued or expanded in 2027. Preliminary calculations put the total budget requirement for the programs at around IDR 31 trillion.
The government is targeting the completion of technical regulations for the programs in the fourth quarter of 2026. Implementation will depend on budget readiness and applicable regulations.
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