Indonesian Tax System

Expat2018

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Jan 20, 2018
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Hi all,

I have a spouse sponsored kitas. I work in Australia for an Australian company but live in Indonesia approximately 10 days / month.

I've heard that because I live in Indonesia I may have to pay tax on some sort of "worldwide income". Does this mean I have to pay tax on my Australian wage in Indonesia?

Can someone explain what this means; and how this relates to a "Resident Taxpayer / Non Resident Taxpayer"?

Cheers,

Jordy.
 

El_Goretto

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Yes, I also believe this to be the case. As long as you're under 183 days, you are not a resident for tax purposes.
 

jstar

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Well, probably not applicable for Jordy, but according to our Pajak, a foreigner working (in or outside of Indonesia) might be considered as a resident even though they have spent less than 183 days in the country.

It’s a bit like in Europe, it’s not enough to have your domicile abroad and leave the country enough to stay under the magical 183 number. So if someone moved with the family to Indonesia and it was obvious they intended to stay there for a longer period and they have their social life in the country, they would be considered residents for tax purposes.
 

Edward

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Well, probably not applicable for Jordy, but according to our Pajak, a foreigner working (in or outside of Indonesia) might be considered as a resident even though they have spent less than 183 days in the country.

It’s a bit like in Europe, it’s not enough to have your domicile abroad and leave the country enough to stay under the magical 183 number. So if someone moved with the family to Indonesia and it was obvious they intended to stay there for a longer period and they have their social life in the country, they would be considered residents for tax purposes.
I am curious to know if one returned to one's country after living in Indonesia for a long time, and was currently on a KITAP, if the home country might take into consideration the KITAP as being a strong indication that one did not intend to reside permanently on return, and that this might be affect the entitlement to public health (say) and the normal legal waiting period? (Clearly the tax department of one's country would be interested in one's residence status.)
 
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Hi all,

I have a spouse sponsored kitas. I work in Australia for an Australian company but live in Indonesia approximately 10 days / month.

I've heard that because I live in Indonesia I may have to pay tax on some sort of "worldwide income". Does this mean I have to pay tax on my Australian wage in Indonesia?

Can someone explain what this means; and how this relates to a "Resident Taxpayer / Non Resident Taxpayer"?

Cheers,

Jordy.
Even if it was 20 days/month, there still wouldn't be a way of you paying tax in Indonesia. As documented many times on the forums, if you go into a tax office trying to declare foreign income which has no connection to Indonesia there won't be any way for them to record it in the system and so they will tell you not to bother. This is especially true if you have no income in Indonesia at all. I tried to get an NPWP to open a bank account and they wouldn't give me one because I'm not employed here. And without an NPWP I don't think you can register to pay tax (afaik).
 

jstar

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I tried to get an NPWP to open a bank account and they wouldn't give me one because I'm not employed here. And without an NPWP I don't think you can register to pay tax (afaik).
The lattter is correct. But I don't work (as TKA) in Indonesia and I do have a NPWP.
 

centurion

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I think that you can declare that you are self-employed-freelance and you can get an NPWP.
 

waarmstrong

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When the NPWP first came out, getting a number was easy. I got one when prohibited from working on a retirement visa and still have it.
 

MieTekTek

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Even if it was 20 days/month, there still wouldn't be a way of you paying tax in Indonesia. As documented many times on the forums, if you go into a tax office trying to declare foreign income which has no connection to Indonesia there won't be any way for them to record it in the system and so they will tell you not to bother. This is especially true if you have no income in Indonesia at all. I tried to get an NPWP to open a bank account and they wouldn't give me one because I'm not employed here. And without an NPWP I don't think you can register to pay tax (afaik).
Hi

I'm currently on a KITAS since mid January and will exceed the 183 days for tax purposes. I'm on a spouse sponsored KITAS, hence am not allowed to work. I do have rental income from my home country which is where I'm getting my living expenses from.

From the post above, does it mean that I do not have to bother about paying tax since my income is in no way "connected" to Indonesia?

On a side note, I did managed to open a bank account with Mandiri despite not having NPWP as my KITAS forbid working in any form in Indonesia.
 
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Please don't take it as professional tax advice, just my observation on how things work here in practice.

I pay tax on my rental income in my home country, so paying tax for a second time on it in Indonesia would make no sense, in any case it would probably be eligible for refund under a double tax treaty, because no income should be taxed twice.

I have heard cases of people calculating how much they think they owe on their foreign income and then going to the tax office and offering to pay it. The reaction from the tax officers is either "sorry we have no way of accepting it in our system" or "thanks for your contribution". So I would say it is really up to you how you approach it.

By the way I don't think it is correct to say "my KITAS forbid working in any form in Indonesia " - the KITAS is a residency document, it does not address the issue of whether you can work or not.
 

MieTekTek

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Thanks.

I do pay tax on my rental income in my home country as well. Guess I'll check with the tax office on this.

Not meaning to start a debate on this, but my spouse sponsored KITAS did state it's not meant for carrying out any sort of employment and it's solely meant for being with my family, that's all.
 

R Cameron

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The official law is that residents of Indonesia (183 days) are required to pay tax on worldwide income. If you are also required to pay taxes on income in your passport country (or another country) there will often be a tax treaty or other double-taxation exemptions so most or all of the income is only taxed once.

That's the official status.

In the real world things are sometimes different.

You can not pay taxes in Indonesia without an NPWP, if someone in the tax office takes your money without you having an NPWP, it is going in someone's pocket. Non-working residents should be able to get an NPWP, but many people seem to have stories of their local tax office refusing to issue one. In such an instance I would argue you've done your due diligence and are under no obligation to escalate the situation and under essentially no risk of getting in trouble (some sort of documentation of their refusal to issue an NPWP would be helpful).

Then there are those who have foreign income and have, or can easily get, an NPWP, but do not wish to pay taxes. For instance those who receive a foreign pension that would be tax-free in their home country but is taxed under Indonesian law often feel that to be unfair and avoid Indonesian tax. In that case you must consider your risk tolerance in combination with the liklihood and ability of the Indonesian tax authorities to investigate and access your foreign financial records. You can read about CRS to begin to understand the international information that might be available to Indonesian authorities.
 

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