As the Annual Tax Return approaches, many expenses that seem like good deeds want to be recorded as costs. The starting point of the Income Tax Law is quite the opposite. Article 9 paragraph (1) letter g states that assets that are donated, assistance, or contributions cannot be deducted from gross income. The exceptions are only two groups: zakat or mandatory religious contributions, and five types of contributions mentioned in Article 6 paragraph (1) letters i to m.
The implementing regulations have just changed. PMK 114 of 2025, established on December 30, 2025, revokes PMK 254/PMK.03/2010 regarding the procedures for deducting zakat and PMK 76/PMK.03/2011 regarding the recording of contributions. The list of zakat recipient institutions now follows PER-4/PJ/2026 dated March 30, 2026, which replaces PER-04/PJ/2022 along with all its amendments.
Group 1: Mandatory Zakat and Religious Contributions
PP 60/2010 Article 1 mentions two forms. First, zakat on income paid by individual taxpayers who are Muslims or domestic corporate taxpayers owned by Muslims, to zakat management bodies or zakat institutions established or approved by the government. Second, mandatory religious contributions for adherents of other religions recognized in Indonesia, to religious institutions established or approved by the government. PMK 114/2025 Article 8 emphasizes that zakat on income includes zakat mal, and an entity is considered to meet the requirements if it is wholly or partially owned, directly or indirectly, by adherents of that religion.
Article 9 paragraph (1) of the same PMK sets three conditions: the payment does not cause fiscal loss in the year it is paid, supported by valid payment evidence, and received by an institution that has an NPWP. Paragraph (2) limits the amount to not exceed the obligation according to each religion's provisions. Paragraph (3) regulates that if the payment causes a loss: only the part that does not cause fiscal loss can be deducted.
Three things that do not qualify:
- Zakat given directly to individuals. PP 60/2010 Article 2 states that expenditures not paid to official institutions cannot be deducted.
- Infak and sedekah. Both are not included in the list of exceptions, unlike zakat.
- Zakat paid to institutions after those institutions are removed from the PER-4/PJ/2026 list, for example, due to the revocation of their operational permit by the Ministry of Religion.
For permanent employees, retirees, ASN, TNI, and Polri who pay zakat through their employer, Article 12 paragraph (3) allows for direct deductions in the calculation of PPh Article 21. Outside of that, deductions are reported in the Annual Tax Return for the year of payment.
Group 2: Five Types of Contributions
| Article 6 paragraph (1) | Type | Note |
|---|---|---|
| letter i | National disaster relief | disasters designated by the Central Government, through disaster management agencies or authorized parties |
| letter j | Research and development | conducted in Indonesia, through research and development institutions |
| letter k | Social infrastructure development | facilities or infrastructure for public benefit that are non-profit |
| letter l | Educational facilities | through educational institutions |
| letter m | Sports development | through performance sports development institutions |
The requirements in PMK 114/2025 Article 4 paragraph (1): Taxpayers must have net fiscal income according to the previous year's Annual Tax Return, contributions must not cause losses in the year given, supported by valid evidence, and the recipient must have an NPWP. Paragraph (2) limits the total value of the five types to a maximum of 5 percent of the net fiscal income of the previous tax year. PP 93/2010 Article 4 adds a prohibition: contributions to parties with special relationships cannot be deducted.
As an illustration, a company with a net fiscal income of Rp2 billion in the 2025 Annual Tax Return has a combined ceiling of Rp100 million for the five contributions throughout 2026. A company that incurred a fiscal loss last year has no ceiling at all.
Zakat and Contributions Are Not Treated Equally
| Mandatory Zakat and Religious Contributions | Five Types of Contributions | |
|---|---|---|
| Mandatory fiscal profit from last year | no | yes |
| Ceiling | as much as the obligation according to religion | 5% of net fiscal income from last year, combined |
| Can cause fiscal loss | no | no |
| Recipient | institutions on the PER-4/PJ/2026 list, with NPWP | institutions according to their type, with NPWP |
Contents of Payment Evidence
PMK 114/2025 Article 18 paragraph (2) requires that payment evidence for zakat must include at least: number and date, NPWP or NIK and full name of the payer, amount paid, name and NPWP of the recipient institution, and the signature of the institution's officer or payment validation.
Expenditures that do not meet the requirements become positive corrections in fiscal reconciliation; the method is discussed in positive and negative fiscal corrections.
Sources
- Directorate General of Taxes, Copy of Law Number 7 of 2021 on the Harmonization of Tax Regulations (Article 6 paragraph (1) and Article 9 paragraph (1) letter g of the Income Tax Law)
- JDIH Ministry of Finance, PP Number 60 of 2010 on Zakat or Mandatory Religious Contributions That Can Be Deducted from Gross Income
- JDIH Ministry of Finance, PP Number 93 of 2010 on Contributions That Can Be Deducted from Gross Income
- JDIH Ministry of Finance, PMK Number 114 of 2025
- JDIH Ministry of Finance, Director General of Taxes Regulation Number PER-4/PJ/2026