When reading the DTA pay more attention to "shall be taxable only" and "may be taxed". One good tax consultant told me tax treaty is more for income from business source in another contracting state. Like for example WNI has income from abroad (pajak pasal 24), or WNA or SPLN get income from dalam negeri (pajak pasal 26). Even he said pension from abroad is similar to JHT, so JHT from luar negeri is not an objek pajak DN. It makes sense and fair to me. I like this one, LOL...Source:
Article 23 Relief from Double Taxation. Paragraph (2). Tax shall be determined in the case of a resident of the Republic of Indonesia as follows: (b) where a resident of Indonesia derives income from the Federal Republic of Germany and such income may be taxed in the Federal Republic of Germany in accordance with the provisions of this Agreement, the amount of the German tax payable in respect of the income shall be allowed as a credit against the Indonesian tax imposed on that resident".
In other words, if an tax-resident (i.e. a NWA-Germany) receives income from Germany and pays taxes on it, he/she can use this amount as a credit to reduce the tax levied in Indonesia. This helps prevent double taxation and ensures that the resident is not taxed twice on the same income.
However ...
I asked AI-copilot of Microsoft to do this calculation assuming:
1. German individual has an (bruto) income of EUR 80,000.
2. Pays tax on this with 'no tax on the first part of income', up to a certain threshold.
3. Tax-free allowance of EUR 21,816 (see post Pantaiema).
4. Taxable income = EUR 80,000 - EUR 21,816 = EUR 58,184
5. Progressive tax rates, but on average let's assume the tax rate for this income is 30%.
6. Tax = (Taxable income) × (Tax rate) = EUR 58,184 × 0.30 = EUR 17,455.20
7. He now becomes a resident of Indonesia.
This is AI-copilot's calculation:
8. We will take into account the tax treaty between these two countries.
9. The amount of German tax he paid is allowed as a credit against Indonesian.
10. Let's assume that the Indonesian tax rate is 30%.
11. Indonesian tax on income from Germany = 30% of EUR 80,000 = EUR 24,000
12. The tax credit EUR 17,455.20.
13. Net Indonesian tax = EUR 24,000 - EUR 17,455.20 = EUR 6,544.80
He still has to pay a net tax of EUR 6,544.80 in Indonesia on the income he receives from Germany, taking into account the tax treaty and the allowed tax credit.
Ya Ampuuun!
But other tax authorities may interpret different.
When reading the DTA we really have read the whole paragraph and previous article. Like what Jstar mentioned, dont assume.
But still....... we have to cross the bridge when we come to it....
