183 day tax residence rule

[Helpful Herbert]

You can try, but I'm not sure they would even give you an NPWP. When I tried they said it is only for people employed in Indonesia or doing business here. I haven't heard of someone getting one solely for the purpose of declaring foreign income, and, as you say, you've already paid tax at higher rates so it would be covered by the relevant double tax treaty.

 

[Samoerai]

You can try, but I'm not sure they would even give you an NPWP. When I tried they said it is only for people employed in Indonesia or doing business here. I haven't heard of someone getting one solely for the purpose of declaring foreign income, and, as you say, you've already paid tax at higher rates so it would be covered by the relevant double tax treaty.

Thanks for the swift answer. My tax agent said the same thing: "You don't need to pay tax, because you don't earn money in Indonesia". Yet, other pensionado's say I have to declare here too, because the Omnibus (if not yet changed) says I have too. I only hope Indonesia respect the tax-treaty with Holland regarding the double tax.

 

[centurion]

I am a 'pensionado' living of my 'pensiun' and I just moved from Holland to Indonesia. A couple of days ago I got my SKTT (and NIK). So, I wonder if I have to apply for a NPWP (tax number), as I will be living here longer than 183 days per year. My pensiun is already been taxed (at 37,10%) and I will not be working in Indonesia. My pensiun is my sole (foreign) income. Question 1 : Has the Omnibus Law already been adjusted into a territorial tax system ? Question 2: Do I have still to apply for a NPWP? Question 3: Do I have to pay (also) tax in Indonesia?

If you are with KITAS or KITAP you are almost in all cases considered automatically and immediately a tax resident and taxed based on worldwide income, and you should report your taxes annually. Tax credits paid abroad are excluded based on double taxation treaties and they differ from treaty to treaty. Pensions are also taxed in most cases. That is the regulation, however, the reality is different.

Omnibus law and bylaws gave more precise definitions of tax residents. You can use this link as you can google translate it easily.

Solomon Consulting Group - Rule - PMK 18/PMK.03/2021 TENTANG PELAKSANAAN UNDANG-UNDANG NOMOR 11 TAHUN 2020 TENTANG CIPTA KERJA DI BIDANG PAJAK PENGHASILAN, PAJAK PERTAMBAHAN NILAI DAN PAJAK PENJUALAN ATAS BARANG MEWAH, SERTA KETENTUAN UMUM DAN TATA

Solomon Consulting Group is a consultant based on Surabaya.PERATURAN MENTERI KEUANGAN REPUBLIK INDONESIA NOMOR 18/PMK.03/2021 TENTANG PELAKSANAAN UNDANG-UNDANG NOMOR 11 TAHUN 2020 TENTANG CIPTA KERJA DI BIDANG PAJAK PENGHASILAN, PAJAK PERTAMBAHAN NILAI DAN PAJAK PENJUALAN ATAS BARANG MEWAH...

www.proscg.com

 

[centurion]

You can try, but I'm not sure they would even give you an NPWP. When I tried they said it is only for people employed in Indonesia or doing business here. I haven't heard of someone getting one solely for the purpose of declaring foreign income, and, as you say, you've already paid tax at higher rates so it would be covered by the relevant double tax treaty.

I got my NPWP one-two months upon my arrival to Indonesia, just for declaring foreign income. I registered as an entrepreneur I think(you have some options in application forms-fields that you can check).

 

[Samoerai]

If you are with KITAS or KITAP you are almost in all cases considered automatically and immediately a tax resident and taxed based on worldwide income, and you should report your taxes annually. Tax credits paid abroad are excluded based on double taxation treaties and they differ from treaty to treaty. Pensions are also taxed in most cases. That is the regulation, however, the reality is different.

Omnibus law and bylaws gave more precise definitions of tax residents. You can use this link as you can google translate it easily.

Solomon Consulting Group - Rule - PMK 18/PMK.03/2021 TENTANG PELAKSANAAN UNDANG-UNDANG NOMOR 11 TAHUN 2020 TENTANG CIPTA KERJA DI BIDANG PAJAK PENGHASILAN, PAJAK PERTAMBAHAN NILAI DAN PAJAK PENJUALAN ATAS BARANG MEWAH, SERTA KETENTUAN UMUM DAN TATA

Solomon Consulting Group is a consultant based on Surabaya.PERATURAN MENTERI KEUANGAN REPUBLIK INDONESIA NOMOR 18/PMK.03/2021 TENTANG PELAKSANAAN UNDANG-UNDANG NOMOR 11 TAHUN 2020 TENTANG CIPTA KERJA DI BIDANG PAJAK PENGHASILAN, PAJAK PERTAMBAHAN NILAI DAN PAJAK PENJUALAN ATAS BARANG MEWAH...

www.proscg.com

Thanks for your response. I will check this link. Most useful.

 

[centurion]

This is the complete list of ratified treatises, Indonesian and English

PERPAJAKAN DDTC - One Stop Indonesian Tax Documentation

Aplikasi pencari dokumen dan pusat pengetahuan perpajakan yang berbasis web di Indonesia. Perpajakan DDTC berpedoman bahwa ketersediaan dokumentasi perpajakan yang lengkap, andal, update, dan informatif merupakan langkah strategis literasi pajak masyarakat Indonesia.

perpajakan.ddtc.co.id

 

[Samoerai]

This is the complete list of ratified treatises, Indonesian and English

PERPAJAKAN DDTC - One Stop Indonesian Tax Documentation

Aplikasi pencari dokumen dan pusat pengetahuan perpajakan yang berbasis web di Indonesia. Perpajakan DDTC berpedoman bahwa ketersediaan dokumentasi perpajakan yang lengkap, andal, update, dan informatif merupakan langkah strategis literasi pajak masyarakat Indonesia.

perpajakan.ddtc.co.id

I found the document regarding the treaty and the article regarding "pensiun". Thanks!

 

[Helpful Herbert]

I got my NPWP one-two months upon my arrival to Indonesia, just for declaring foreign income. I registered as an entrepreneur I think(you have some options in application forms-fields that you can check).

Interesting idea to consider yourself an entrepreneur as pensioner. Personally I would regard that as an incorrect classification, and if they require foreign pensioners to register they should introduce a field for that. The fact they don't have one makes me think there is no obligation to file in that case.

 

[Samoerai]

Interesting idea to consider yourself an entrepreneur as pensioner. Personally I would regard that as an incorrect classification, and if they require foreign pensioners to register they should introduce a field for that. The fact they don't have one makes me think there is no obligation to file in that case.

I have not yet applied for a NPWP. But I will soon and also will ask at the 'kantor pajak" for more information regarding a NPWP for 'pensionado'.

 

[centurion]

Interesting idea to consider yourself an entrepreneur as pensioner. Personally I would regard that as an incorrect classification, and if they require foreign pensioners to register they should introduce a field for that. The fact they don't have one makes me think there is no obligation to file in that case.

I am not retiree so I did not apply as such. There is a checkbox "pensiunan" in NPWP application form-you are welcome to apply and submit yor tax reports.

 

[IndoTom]

I don't think Indonesia will try to tax foreign retirees pensions. It's not worth living here if that happens.

 

[Samoerai]

I don't think Indonesia will try to tax foreign retirees pensions. It's not worth living here if that happens.

I agree. Yet, if the Omnibus law regarding world income has not yet been changed, then one must abide by the law. I don't know if 'kantor pajak' wil hold me to that Omnibus law. To make sure I will apply for a NPWP ... just to make sure.

 

[IndoTom]

I agree. Yet, if the Omnibus law regarding world income has not yet been changed, then one must abide by the law. I don't know if 'kantor pajak' wil hold me to that Omnibus law. To make sure I will apply for a NPWP ... just to make sure.

I'm not sure if you are new to living in Indonesia but rules are not always real rules. My advise is not to rush to apply for an NPWP (tax ID). Watch and listen to see if other well experienced expats that have retired here get it first. Once you have an NPWP you can't undo it.

 

[snpark]

Actually you can cancel an NPWP - when you cancel your KITAS and leave the country etc you are supposed to close your tax file and return the physical card as well

Now the question is if you return would you get the same tax number as you would have the same immigration file number, or would you get a new number

In which case when the banks etc ask for your NPWP just make up a random 16 digit number and see what they say?

 

[Samoerai]

I'm not sure if you are new to living in Indonesia but rules are not always real rules. My advise is not to rush to apply for an NPWP (tax ID). Watch and listen to see if other well experienced expats that have retired here get it first. Once you have an NPWP you can't undo it.

Yes, I am new to living in Indonesia. Entered the country last May. I asked around in some forums about paying tax as a 'pensionado' and applying for a NPWP. Some say: "Yes", like Centurion in this forum. Some say: "No and don't apply for a NPWP". The problem is also, when you do not apply for a NPWP you can get 20% fee on top of what you have to pay on tax.

 

[Samoerai]

Yes, I am new to living in Indonesia. Entered the country last May. I asked around in some forums about paying tax as a 'pensionado' and applying for a NPWP. Some say: "Yes", like Centurion in this forum. Some say: "No and don't apply for a NPWP". The problem is also, when you do not apply for a NPWP you can get 20% fee on top of what you have to pay on tax.

20% fee ... sorry, meant 20% fine

 

[Helpful Herbert]

20% fee ... sorry, meant 20% fine

You're assuming there are people in the tax authority whose job it is to go around checking up and collecting small amounts of tax from foreign pensioners. Spoiler: there aren't. As IndoTom says, take some time to see how rules here are implemented rather than literally what is written.
There are dozens of laws here that we probably break without even knowing it, that's the problem with a poorly written and often contradictory legal system.

 

[centurion]

Nice to see so many foreigners-residents, with opinions and critics about the Indonesian government, bad handling of the pandemics, but not willing to contribute with tax payments.

Their mere presence and spending, employment of Indonesians as servants in their homes, should be a privilege for the Government of Indonesia, according to them.

Do all foreign citizens-Indonesian residents, that regularly submit their tax reports to their government and regularly collect stimulus checks, not even considering paying full tax here?

 

[centurion]

Yes, I am new to living in Indonesia. Entered the country last May. I asked around in some forums about paying tax as a 'pensionado' and applying for a NPWP. Some say: "Yes", like Centurion in this forum. Some say: "No and don't apply for a NPWP". The problem is also, when you do not apply for a NPWP you can get 20% fee on top of what you have to pay on tax.

You should apply for NPWP and report your pension. At the end of the tax year, you should refer to the double taxation treaty Indonesia-Netherlands, and as you have a tax credit of 37% on that, and as the max tax in Indonesia is 30%, you would pay nothing. Taxes paid for pensions in the Netherlands are considered tax-deductible in Indonesia.

 

[Samoerai]

You should apply for NPWP and report your pension. At the end of the tax year, you should refer to the double taxation treaty Indonesia-Netherlands, and as you have a tax credit of 37% on that, and as the max tax in Indonesia is 30%, you would pay nothing. Taxes paid for pensions in the Netherlands are considered tax-deductible in Indonesia.

Example, just for the sake of it:

Let's say someone's pensiun in Holland is 5.000 euro gros per month.
The tax (in this case is 37,1 %) paid in Holland is 1.855 euro per month.
Tax per year is 22.260 euro per year.
So, this person has to submit his world gross income to the Indonesian Tax Departement .
The world gross income would be 60.000 euro per year.
And pay tax in Indonesia: 30% x 60.000 euro = 18.000 euro.
This person can subtract the tax (22.260 euro) already paid in Holland, according to the tax treaty
So, 18.000 euro - 22.260 euro = -4.260 euro.
Negative amount.
So, this person would pay no tax in Indonesia