Unlocking Fiscal Leverage: How PMK No. 72 of 2025 Delivers Strategic Tax Incentives to Indonesian Businesses

In October 2025, Minister of Finance Regulation Number 72 of 2025 (PMK 72/2025) emerged as a game-changer for eligible Indonesian businesses to claim tax incentives.

The regulation expands the government-borne income tax subsidy under Article 21 (PPh 21 DTP) to include not only manufacturing sectors, such as textiles, footwear, furniture and leather goods, but also the pivotal tourism industry. This marks a strategic shift designed to strengthen key engines of Indonesia’s economy.

For qualified employers, PMK 72/2025 means the government takes on the burden of employees’ PPh 21. In practice, this allows companies to pay the full gross salary without deducting income tax borne by the government.

• January to December 2025 for the covered industrial sectors, such as Textile and Apparel, Footwear, Furniture, Leather and leather goods
• October to December 2025 for the tourism sector

This incentive offers more than short-term tax relief. It becomes a strategic instrument enabling companies to improve liquidity, optimise payroll costs, raise employee take-home pay, boost morale and retention, and enhance competitiveness amid evolving economic headwinds.

Key Business Advantages of the Tax Incentives

• Improved cash flow and liquidity. Freeing up working capital by reducing the monthly PPh 21 burden allows companies, particularly SMEs and exporters, to sustain business continuity, cover operational gaps, expand production, and invest in raw material purchases.
• Payroll cost optimisation. Employers can maintain or increase employee net salaries without increasing gross wages. The government-funded tax relief acts like a wage subsidy, helping avoid wage-related disputes during uncertain cycles.
• Stronger employee morale and retention. Receiving full salary without tax deductions boosts employee satisfaction and loyalty, especially vital in high-turnover sectors such as textiles and hospitality. Reduced recruitment and training costs further strengthen the business case.
• Competitive recovery and growth. Early adoption of PMK 72/2025 allows businesses in labour- and export-intensive sectors to lower unit costs, offer more competitive pricing, reinvest in innovation or marketing, and pull ahead of competitors delaying uptake.
• Enhanced compliance reputation. Proper implementation signals regulatory maturity, solid governance and investor readiness—qualities favoured by auditors, financial institutions and regulators alike.

Implementation Checklist for Business Owners

1. Verify eligibility: confirm the business classification code (KLU) registered with the Direktorat Jenderal Pajak (DGT) aligns with the sectors listed under PMK 72/2025.
2. Prepare documentation: employee list, tax worksheets and payroll records as required in Annexes A-C of PMK 72/2025.
3. Update OSS-RBA (Online Single Submission – Risk-Based Approach) and DGT registration to avoid disqualification.
4. Coordinate with professional tax consultants or in-house finance teams to ensure accuracy and full compliance.
5. Communicate transparently with employees: explain the incentive, outline what it means for payroll, and build internal goodwill and trust.

By proactively embracing PMK 72/2025, business owners can secure immediate cash-flow relief, elevate workforce satisfaction and build a reputation of compliance and resilience that aligns with Indonesia’s post-pandemic growth agenda.

For firms seeking aligned expertise in optimising tax incentives, professional tax advisory services from Business Hub Asia offer strategic guidance through every step of application and implementation.