Furthermore, fringe benefit tax can prevent any potential loopholes that could lead to tax evasion or avoidance. By subjecting fringe benefits to taxation, the government closes any gaps in the tax system that may have allowed individuals or companies to exploit these benefits for personal gain.
Fringe Benefit Tax Exemptions
However, in the interest of equity, it is important to note that not all benefits or facilities provided by employers will be subject to taxation. The regulations also encompass exemptions for various tax-free benefits and facilities. For instance, foods and beverages provided to all employees are considered non-taxable. Similarly, benefits related to security, health, and occupational safety, such as uniforms and safety equipment, are also exempt from taxation.
There are also nominal limitations for certain fringe benefits that are exempt from tax, such as meal vouchers or compensation up to a maximum of Rp 2 million per month, rent costs for an apartment or house up to a maximum of Rp 2 million per month, and non-religious day gifts up to IDR 3 million per year.
As informed in the press release from the Directorate General of Taxes, these limitations have been determined based on factors such as Purchasing Power Parity (OECD), Cost of Living Survey (BPS), Input Cost Standards (Ministry of Finance), Sport Development Index (Ministry of Youth and Sports), and benchmarks of several countries to ensure fairness and equity for the public.
In conclusion, the objective of the fringe benefits tax regulation goes beyond increasing government revenue or imposing additional economic burdens. Although employees are required to pay taxes on their fringe benefits, companies can also deduct their tax from the fringe benefit costs. This could potentially reduce government revenue and economic burdens on the other side.
Therefore, the primary objective of the fringe benefits tax regulation is to promote fairness and equality among employees. By upholding principles of fairness and equality, the fringe benefits tax regulation not only support the integrity and transparency of the tax system but also reinforces a harmonious and equitable work environment for all individuals involved.
