For years, Indonesian employers could hand out in-kind benefits, gifts, meals, facilities, without worrying about payroll tax: natura and kenikmatan (benefits-in-kind) were largely outside the scope of employee income tax. That changed with PP 55/2022, followed by the implementing rules in PMK 66/2023, which took effect in July 2023. The reform reversed the old default: in-kind benefits given to employees are now taxable income by default, added to the employee's other earnings and withheld through PPh 21, unless they fall into one of a specific list of exempted categories. If your understanding of Indonesia's gifting rules predates mid-2023, it's worth re-reading, because the baseline assumption flipped. Here's what's actually exempt today, how THR fits in, and 12 gift ideas that stay inside the limits.
The exempted gift categories
PMK 66/2023 doesn't tax every in-kind benefit; it carves out specific categories, each with its own treatment:
- Religious holiday gifts: unlimited. Gifts tied to a recognized religious holiday, Idul Fitri, Christmas, Nyepi, Waisak, or Chinese New Year, are fully exempt from employee income tax regardless of value. There's no ceiling on this category at all.
- Other gifts: Rp 3,000,000 per employee per year. Gifts not tied to one of those religious occasions (birthdays, work anniversaries, general appreciation gifts, and so on) are exempt only up to a combined Rp 3,000,000 per employee per year.
- Sports facilities and gear: Rp 1,500,000 per employee per year. A separate, smaller allowance covers sports facilities and equipment provided to employees.
All three caps work the same way: it's an excess-only mechanic, not a cliff edge. Cross the Rp 3,000,000 general-gift threshold and only the amount above it becomes taxable income, added to the employee's earnings and withheld by the employer through PPh 21; the portion under the cap stays exempt. The religious-holiday category has no ceiling to cross in the first place.
THR is not a discretionary gift
It's easy to conflate THR (Tunjangan Hari Raya) with the religious-holiday gift exemption above, but they're governed by entirely different rules. THR is a mandatory statutory cash allowance under Indonesian labor law, not a discretionary benefit: employees with 12 months or more of tenure are entitled to one month's average salary, pro-rated for shorter tenure. It must be paid in cash, employers cannot substitute it with merchandise, hampers, or any other in-kind gift, and it sits completely outside the natura/kenikmatan gift rules covered above. A branded gift given at Idul Fitri or Christmas can be tax-free under the religious-holiday exemption; it still doesn't count toward, or replace, the THR obligation.
12 gift ideas
Because the religious-holiday exemption has no ceiling and the general Rp 3,000,000 gift cap comfortably covers most branded merchandise, all 12 products below fit inside a single year's allowance, with room to combine a few. One caveat worth repeating: the unlimited exemption only applies when a gift is timed to a recognized religious holiday (Idul Fitri, Christmas, Nyepi, Waisak, or Chinese New Year). Give the same item outside that window, say, for a work anniversary or a general thank-you, and it falls under the capped Rp 3,000,000-per-employee-per-year general gift category instead. Looking for more options? See our full roundup of 20 tax-free employee gift ideas for Indonesia.
1. Hoodie – The Rex: the flagship piece
A heavyweight 280 gsm organic cotton hoodie that employees actually wear, and one of the most popular gifting items in the catalogue. At Rp 702,000, it uses less than a quarter of the Rp 3,000,000 general gift cap on its own, or sits fully exempt if timed to Idul Fitri or Christmas.
- Material: 90% organic cotton, 10% polyester.
- Branding: embroidery, print, or patches.
- Order: MOQ 100 · from Rp 702,000/unit.
2. RollTop Backpack: the everyday bag
A water-resistant backpack with a laptop compartment that quickly becomes someone's everyday bag, comfortably inside either the general cap or the unlimited holiday exemption.
- Material: GRS-certified recycled PU, water-resistant.
- Branding: print or embroidery.
- Order: MOQ 25 · from Rp 430,000/unit.
3. Noise-Cancelling Headphones: the premium pick
A genuine step up in perceived value, still leaving most of the Rp 3,000,000 annual allowance untouched if given outside a religious holiday.
- Material: recycled ABS, ANC + ENC, foldable.
- Branding: digital print or doming.
- Order: MOQ 50 · from Rp 428,000/unit.
4. Bamboo Tea Bottle: the natural choice
A bamboo exterior over a durable stainless steel interior, a warmer-looking alternative to an all-metal bottle, priced well inside the general gift cap on its own.
- Material: stainless steel, bamboo.
- Branding: laser engraving or print.
- Order: MOQ 50 · from Rp 327,000/unit.
5. Wireless Powerbank: useful everyday tech
A magnetic wireless powerbank in recycled ABS plastic, genuinely useful for any commute, and easy to combine with a second gift later in the year.
- Material: recycled ABS plastic.
- Branding: pad print or digital print.
- Order: MOQ 50 · from Rp 322,000/unit.
6. Espresso Mug: the desk essential
A proper espresso cup for the coffee obsessives on the team, a small gift that still gets used daily and barely dents the Rp 3,000,000 annual limit.
- Material: ceramic.
- Branding: debossed or printed logo.
- Order: MOQ 108 · from Rp 148,000/unit.
7. Baseball Cap: the everyday accessory
An affordable, highly visible accessory that works all year round and stacks easily with other small gifts within the same allowance.
- Material: 100% cotton.
- Branding: embroidery.
- Order: MOQ 100 · from Rp 146,000/unit.
8. Knitted Scarf: the cosy extra
A high perceived-value item for a cooler-weather or year-end gift, priced well inside the annual allowance even alongside another gift earlier in the year.
- Material: 80% viscose, 20% polyester.
- Branding: woven label.
- Order: MOQ 100 · from Rp 134,000/unit.
9. Premium Tote Bag: the lightweight carry
A heavyweight cotton tote with a premium feel, everyday enough to actually get used, and one of the lowest-cost items on this list.
- Material: 270gsm cotton.
- Branding: print or custom straps.
- Order: MOQ 100 · from Rp 113,000/unit.
10. A5 Notebook: FSC-certified paper
An A5 hardcover with elastic closure and ribbon marker, practical with a traceable material story, and a natural pairing with any bigger-ticket item above.
- Material: FSC-certified paper, PU cover.
- Branding: debossing or print on the cover.
- Order: MOQ 100 · from Rp 80,000/unit.
11. Recycled Steel Bottle: everyday hydration
Vacuum insulation in recycled stainless steel, a gift that gets used and seen every day, and leaves most of the annual allowance untouched.
- Material: recycled stainless steel.
- Branding: laser engraving or print.
- Order: MOQ 50 · from Rp 193,000/unit.
View the Recycled Steel Bottle →
12. Sports Socks: the safe favourite
Sunday's most-ordered item, a small, unexpected gift that always lands well, and leaves almost the entire annual allowance untouched.
- Material: 80% cotton, 17% polyamide, 3% elastane.
- Branding: knitted-in logo zones.
- Order: MOQ 100 · from Rp 70,000/unit.
What about client gifts?
Gifts and donations to clients or business partners are, by default, not deductible for Indonesian corporate income tax; plain client gifts fall under the general rule against deducting gifts and donations. There's a route to deductibility, but it requires documentation: genuine promotional or marketing expenditure, gifts given as part of a demonstrable marketing effort rather than simple goodwill, can be deducted, but only if it's supported by a daftar nominatif (nominative list), a detailed log of each recipient, the amount given, and the business purpose, attached to the company's annual corporate tax return. Skip that documentation and the expense is treated as fictitious for tax purposes and disallowed entirely, regardless of how legitimate the gifting programme actually was.
VAT on gifts
Indonesia's standard VAT rate is 12%, but a tax-base adjustment brings the effective rate for ordinary (non-luxury) goods and services down to 11%, in effect since January 2025; only luxury goods are taxed at the full 12%. That effective rate applies to branded merchandise purchases the same way it applies to any other purchase. What catches businesses out is the next step: giving goods away for free, including promotional samples and employee or client gifts, is still treated as a taxable supply under Indonesian VAT law. Even though no payment changes hands, the giving business must self-assess and remit VAT on the value of the goods given away.
Common mistakes
- Assuming every gift qualifies for the unlimited religious-holiday exemption. Only gifts genuinely tied to a recognized religious holiday (Idul Fitri, Christmas, Nyepi, Waisak, Chinese New Year) are uncapped; give the same item at any other time and it falls under the Rp 3,000,000-per-employee-per-year general gift cap instead.
- Trying to substitute THR with merchandise. THR is a mandatory statutory cash allowance under labor law; it must be paid in cash and cannot be replaced with a hamper, voucher, or branded gift, however generous.
- Giving a client gift without a documented nominative list and assuming it's deductible. Without a daftar nominatif logging the recipient, amount, and business purpose, a client gift is treated as a non-deductible donation, not a marketing expense, no matter how clearly promotional its intent.
If you're setting up an ongoing employee gifting program rather than a one-off order, Sunday's employee gifting platform handles sourcing, branding, and delivery in one place.
Note: this article is a general explainer, not tax advice. Thresholds and rules can change, and how they apply can depend on your business's specific circumstances, so confirm the details with your accountant or payroll provider before relying on them.
This guide is part of our complete country-by-country series. See Employee Gift Tax Rules by Country: The Complete 2026 Guide for all covered countries.
Order gifts for your team
Every product above is fully customisable with your branding and available in business order quantities. Browse the full range in the Sunday catalogue to put together a gifting programme that fits comfortably within Indonesia's religious-holiday, general-gift, and sports-facility allowances. For 20 more branded merchandise ideas priced and sized for these allowances, see our 20 best tax-free employee gifts for Indonesia roundup. Sunday also supports enterprise-scale rollouts across multiple countries — see the full Sunday platform for details.
