Indonesian's tax

[yantiharun1]

Can you anyone tell me if you have to pay Indonesian's tax on your Social Security?

 

[marcus]

Can you anyone tell me if you have to pay Indonesian's tax on your Social Security?

Theoretically (see below) , yes . There may be few more exceptions in the Tax Treaty between Indonesia and the country from where you receive this income , if it is the case .

Practically , see https://www.expatindo.org/community/threads/e33g-visa-1-yr.7647/


-------------------------------------

Omnibus Law (UU no.11 Year 2020) .
Article 1 1 1 - free translation
Several provisions ... concerning Income Tax ... are amended as follows:
Article 4
(1) The object of taxation is income, namely any additional economic capacity received or obtained by a Taxpayer, whether originating from Indonesia or outside Indonesia, that can be used for consumption or to increase the Taxpayer's wealth, in any name and form, ...
(3) The following are exempt from taxation:
a. 1. assistance or donations, including zakat ...; and
2. gifted assets received by the family consanguineous in a straight line of descent degrees, religious bodies, educational bodies, social bodies including foundations, cooperatives, or private person who runs a micro or small business, ... as long as there is no connection with the business, employment, ownership, or control among the parties concerned;
b. inheritance;
c. assets, including cash deposits received by an entity as referred to in Article 2 paragraph (1) letter b in lieu of shares or capital participation;
d. compensation or compensation in connection with work or services received or obtained in kind or benefit from a Taxpayer or the Government, except those provided by non-Taxpayers, Taxpayers subject to final tax, or Taxpayers using special calculation norms (deemed profit) as referred to in Article 15;
e. payments from insurance companies due to accidents, illness, or death of the insured, and insurance payments for scholarships;
f. Dividends or other income subject to the following provisions:
1. Dividends originating from within the country ...
2. Dividends originating from abroad and after-tax income from a permanent establishment abroad received or obtained by domestic corporate Taxpayers or domestic individual Taxpayers, provided that they are invested or used to support other business activities within Indonesia within a certain period, and meet the following requirements:
a) The dividends and after-tax income invested are at least 30% of the after-tax profit; or
b) dividends originating from overseas business entities whose shares are not traded on a stock exchange are invested in Indonesia before the Director General of Taxes issues a tax assessment letter for the dividends in connection with the application of Article 18 paragraph (2) of this Law;
3. Dividends that are derived from abroad as referred to in point 2 are: ...
g. contributions received or accrued by pension funds whose establishment has been approved by the Minister of Finance, whether paid by employers or employees;
h. income from capital invested by pension funds as referred to in letter g, in certain fields stipulated by the Decree of the Minister of Finance;
i. Shares of profits or remaining business results received or obtained by members of cooperatives, limited partnerships whose capital is not divided into shares, partnerships, associations, firms, and joint ventures, including holders of participation units in collective investment contracts;
j. is removed;
k. income received or obtained by a venture capital company in the form of a profit share from a joint venture entity established and conducting business or activities in Indonesia, provided that the joint venture entity:
1. is a micro, small, or medium-sized enterprise, or one that conducts activities in business sectors regulated by the Minister of Finance; and
2. its shares are not traded on a stock exchange in Indonesia;
l. Scholarships that meet certain requirements, ...
m. The surplus received or obtained by non-profit bodies or institutions engaged in education and/or research and ...
n. assistance or compensation paid by the Social Security Administration to certain taxpayers, which ...
o. Haji Pilgrimage Management Fee Deposit Fund ...
p. surplus received/obtained by social and religious bodies or institutions registered with ...

 

[jstar]

The proposal for that Omnibus law was much more elaborate in its original form. And its idea was that foreign income of WNA would not be taxed. That also (partly) explains why the Pajak was never interested in providing NPWP’s to foreigners that don‘t work here. Probably another reason is that it’s complicated and peanuts.

Anyway, these are the 70+ countries that RI has a tax treaty with:

Tax Treaty | Direktorat Jenderal Pajak

www.pajak.go.id

 

[harryopal1]

I raised this issue some while ago with quite a bit of discussion. And I was very anxious at the time with penalties something like four times the amount of unpaid tax plus the possibility of gaol. As Marcus has pointed out, theoretically, yes social security could be taxed. After all governments can tax whatever they like and laws are in place in Indonesia that this could be done. However, if you are not employed and therefore are not registered with a tax number and your sole source of income is social security you are not obliged to register for a tax number. Money for cost of living I transfer here from savings so the amounts are relatively small. It seems the government has not previously and is not presently disposed to make an issue of this and winkle out tax from social security of foreigners.

So, in short Yantiharun, I don't think you should be stressed about this. If you receive Indonesian social security then that might be taxable depending upon your assets. As for foreigners... over time things change so this may come about in the future.

 

[yantiharun1]

Theoretically (see below) , yes . There may be few more exceptions in the Tax Treaty between Indonesia and the country from where you receive this income , if it is the case .

Practically , see https://www.expatindo.org/community/threads/e33g-visa-1-yr.7647/


-------------------------------------

Omnibus Law (UU no.11 Year 2020) .
Article 1 1 1 - free translation
Several provisions ... concerning Income Tax ... are amended as follows:
Article 4
(1) The object of taxation is income, namely any additional economic capacity received or obtained by a Taxpayer, whether originating from Indonesia or outside Indonesia, that can be used for consumption or to increase the Taxpayer's wealth, in any name and form, ...
(3) The following are exempt from taxation:
a. 1. assistance or donations, including zakat ...; and
2. gifted assets received by the family consanguineous in a straight line of descent degrees, religious bodies, educational bodies, social bodies including foundations, cooperatives, or private person who runs a micro or small business, ... as long as there is no connection with the business, employment, ownership, or control among the parties concerned;
b. inheritance;
c. assets, including cash deposits received by an entity as referred to in Article 2 paragraph (1) letter b in lieu of shares or capital participation;
d. compensation or compensation in connection with work or services received or obtained in kind or benefit from a Taxpayer or the Government, except those provided by non-Taxpayers, Taxpayers subject to final tax, or Taxpayers using special calculation norms (deemed profit) as referred to in Article 15;
e. payments from insurance companies due to accidents, illness, or death of the insured, and insurance payments for scholarships;
f. Dividends or other income subject to the following provisions:
1. Dividends originating from within the country ...
2. Dividends originating from abroad and after-tax income from a permanent establishment abroad received or obtained by domestic corporate Taxpayers or domestic individual Taxpayers, provided that they are invested or used to support other business activities within Indonesia within a certain period, and meet the following requirements:
a) The dividends and after-tax income invested are at least 30% of the after-tax profit; or
b) dividends originating from overseas business entities whose shares are not traded on a stock exchange are invested in Indonesia before the Director General of Taxes issues a tax assessment letter for the dividends in connection with the application of Article 18 paragraph (2) of this Law;
3. Dividends that are derived from abroad as referred to in point 2 are: ...
g. contributions received or accrued by pension funds whose establishment has been approved by the Minister of Finance, whether paid by employers or employees;
h. income from capital invested by pension funds as referred to in letter g, in certain fields stipulated by the Decree of the Minister of Finance;
i. Shares of profits or remaining business results received or obtained by members of cooperatives, limited partnerships whose capital is not divided into shares, partnerships, associations, firms, and joint ventures, including holders of participation units in collective investment contracts;
j. is removed;
k. income received or obtained by a venture capital company in the form of a profit share from a joint venture entity established and conducting business or activities in Indonesia, provided that the joint venture entity:
1. is a micro, small, or medium-sized enterprise, or one that conducts activities in business sectors regulated by the Minister of Finance; and
2. its shares are not traded on a stock exchange in Indonesia;
l. Scholarships that meet certain requirements, ...
m. The surplus received or obtained by non-profit bodies or institutions engaged in education and/or research and ...
n. assistance or compensation paid by the Social Security Administration to certain taxpayers, which ...
o. Haji Pilgrimage Management Fee Deposit Fund ...
p. surplus received/obtained by social and religious bodies or institutions registered with ...

Thanks for the info!