Bambang Ismoyo, Jakarta – Indonesian government is offering tax breaks and subsidizing internship wages to help companies avoid layoffs amid mounting pressure on several industries, Chief of Economic Affairs Minister Airlangga Hartarto said on Thursday.

One of the key measures is the government-borne Article 21 income tax (PPh 21 DTP) facility for eligible workers earning up to Rp 10 million ($560) in gross monthly income in designated sectors.

Airlangga said the incentive is intended to reduce companies' labor costs and discourage layoffs.

"The government has provided incentives to companies so they do not lay off workers. The government covers the income tax for employees earning up to Rp 10 million a month, and we hope this will help prevent layoffs," Airlangga said at his ministry's office in Jakarta.

In addition to tax relief, the government is also using the National Internship Program to support businesses while expanding employment opportunities.

Under the scheme, the government covers the allowance or salary of new internship participants for up to six months, giving companies an incentive to recruit and train new workers.

"The government also has the National Internship Program, which gives companies additional labor incentives because interns' wages are paid by the government," Airlangga said.

He said the combination of tax incentives and internship support is expected to help companies retain existing employees while continuing to hire new workers, supporting household purchasing power and labor market stability amid layoff pressures.

Source: https://jakartaglobe.id/business/indonesia-expands-tax-wage-incentives-to-curb-layoff