is transferring non-income money overseas taxed

[haditj]

Hello, I'm sorry if this question has been answered already but I cant find it. I understand that income made overseas and then remitted into indonesia is taxed. However what about money that is not income like just my checking account in america. for example, if I want to buy a house in indonesia (I'm an indonesian citizen) and I have money in an american bank account, would I just transfer a large sum of money to my indonesian bank from my american bank (like $40,000+)? Is this going to be seen as income or any other tax?

 

[centurion]

If your 40.000 USD have a clean origin, taxes are being paid and reported as an asset in the tax report in Indonesia, there would be no problem.

 

[haditj]

thanks for the response. when you say "taxes are being paid". What taxes if any will I need to pay for this transfer?

 

[make_batik_great_again]

I understand that income made overseas and then remitted into indonesia is taxed.

My understanding is that it is irrelevant whether or not you transfer that money from overseas to Indonesia. If you are a tax-resident in Indonesia and you earn money abroad, then this income is taxable in Indonesia - even if you do not transfer that money to Indonesia or convert it into IDR.

But of course, it can be that the country where you earned that money has a double tax treaty which might say that this income is only taxable where you earned it or where the company you work for is located. But also then it should not make a difference whether or not you transfer that money to Indonesia.

First question that you should check:

Are you a tax-resident in Indonesia by the definitions of the tax authorities? As far as I know, one criteria is if you have a KITAS/P. But even if not (in your case KITAP and so on is probably irrelevant since you are Indonesian), there are additional criteria of becoming a tax-resident here. I think an active NPWP is also sufficient to being treated as a tax-resident (not 100% sure about it).

Second step (if you are a tax-resident in Indonesia) would be to check the double tax treaty between the country where you earned that income and Indonesia. Check what the dtt says about who is allowed to tax that type of income.

Third step could be that you check if that type of income qualifies as non-taxable income if re-invested in Indonesia.

If you earned that money before you became a tax-resident in Indonesia, then the transfer to an Indonesian bank account itself should not be tax-relevant in my view - at least I never heard of any case like that. I mean, you transfer it from one account under your name to another account under your name. I don‘t know how anyone could judge that as income.

But as centurion stated...if it is a large amount it can happen that the authorities want to check the source of the money to ensure you earned it legally and declared it somehow in the past (in the country where you earned it/where you worked).

I hope I could help. Of course, I cannot guarantee that all the information is correct since I am not a tax consultant. If anyone has a different understanding or opinion, feel free to correct me

 

[jstar]

I have not met a lot of Indonesians who changed their official domicile in the country when moving abroad. Add to that they did not correctly report their foreign income after they left RI. And even with shorter assignments many did not -per the 183 day Tax Regulation- inactivate their Indonesian NPWP for a longer stay. So the question is if the OP still (has to) file(s) her/his SPT.

 

[snpark]

thanks for the response. when you say "taxes are being paid". What taxes if any will I need to pay for this transfer?

The taxes at source. Not for the transfer. Where did the 40 originate? Income? Sale of house? Etc. If you paid tax on that 40 you don't need to pay again obviously. It's been taxed once.
When you send it here and they (should) ask for due diligence etc where's it from, you say it's my savings from my pre taxed income in USA.

 

[snpark]

You might be questioned more about your visa status. You have indonesian passport but green card American citizen? Or US passport?

 

[Helpful Herbert]

Hello, I'm sorry if this question has been answered already but I cant find it. I understand that income made overseas and then remitted into indonesia is taxed. However what about money that is not income like just my checking account in america. for example, if I want to buy a house in indonesia (I'm an indonesian citizen) and I have money in an american bank account, would I just transfer a large sum of money to my indonesian bank from my american bank (like $40,000+)? Is this going to be seen as income or any other tax?

Wait until someone contacts you about it, otherwise go ahead.

 

[Samoerai]

If you earned that money before you became a tax-resident in Indonesia, then the transfer to an Indonesian bank account itself should not be tax-relevant in my view - at least I never heard of any case like that. I mean, you transfer it from one account under your name to another account under your name. I don‘t know how anyone could judge that as income.

Interesting ...

 

[Samoerai]

But as centurion stated...if it is a large amount it can happen that the authorities want to check the source of the money to ensure you earned it legally and declared it somehow in the past (in the country where you earned it/where you worked).

If one wants to transfer large amounts of money, the bank (and also parties like TransferWise) will ask where that money is coming from, before transfer.

 

[gemima]

If one wants to transfer large amounts of money, the bank (and also parties like TransferWise) will ask where that money is coming from, before transfer.

They ask you from a drop-down list in my experience. I have only moved money that is clearly my salary so maybe that has made it easier for me in the past (I've never had to show any evidence, but I've nothing to hide). I usually use Topremit to manage the transfers and very happy with them.

 

[jstar]

It depends on the amount of money you want to transfer of course. Just like in other countries you need to be able to explain the origin with documentation. For larger amounts we always mention the purpose and even a telephone number in the transfer remarks. Sometimes the money was held till we took action ourselves (i.e. call the bank).

To prevent money laundering and subsidizing terrorist groups etc. the Bank of Indonesia (BI) implemented the ‘know your customer’ and since 2002 there is a so called Pusat Pelaporan dan Analisis Transaksi Keuangan (PPATK) in place. That organization makes sure the banks comply and investigates when there’s a red flag.

 

[jstar]

Like I said, it really depends on the tax ‘status’ of the OP. This is not a WNA who just wants to send some money over but a WNI who (presumably?) was/is a tax subject (before?) and has an (in-active?) NPWP and (probably?) reported via the annual tax reporting (SPT) before. Too many question marks and there‘s no standard answer in this case, more info is needed.

 

[Samoerai]

If one wants to transfer more than 9999 euro, it will raise a flag at my bank. and transferring to Indonesia will raise another red flag. The bank will ask you to explain the source of the money.

Btw. one is allowed to bring 9999 euro cash in the pocket across the border (from Europe), if I am not mistaken.

 

[snpark]

Source. Savings from income
Reason. Potential property / land purchase for an investment

Done
It's literally just a box checking question. No one actually gives a sh1t tbh
Like the immigration arrival form "occupation"
Just put businessman / entrepreneur

Or "not this time" if you're Angela Merkel lol

 

[pantaiema]

If you earned that money before you became a tax-resident in Indonesia, then the transfer to an Indonesian bank account itself should not be tax-relevant in my view - at least I never heard of any case like that. I mean, you transfer it from one account under your name to another account under your name. I don‘t know how anyone could judge that as income.

Does anyone know the authoritative source of confirming this information? I prefer the authoritative source from Indonesian Tax Authorities, Law, Government. Ministerial Directorate general guidance, etc, which clearly confirming this (no ambiguity) which could be officially used as a defence, rather than from International accountancy firms.

 

[centurion]

Does anyone know the authoritative source of confirming this information? I prefer the authoritative source from Indonesian Tax Authorities, Law, Government. Ministerial Directorate general guidance, etc, which clearly confirming this (no ambiguity) which could be officially used as a defence, rather than from International accountancy firms.

You can ask in tax office, but you can get exposed if there is some issue.

The answer is correct, there should be no taxation if the money was earned before becoming tax resident. The foreign assets/liabilities should be included in the yearly SPT report however.

 

[Samoerai]

Does anyone know the authoritative source of confirming this information? I prefer the authoritative source from Indonesian Tax Authorities, Law, Government. Ministerial Directorate general guidance, etc, which clearly confirming this (no ambiguity) which could be officially used as a defence, rather than from International accountancy firms.

I ask the AI-copilot this question about transferring money (earned before becoming a tax resident in Indonesia). In this particular case being a tax resident in The Netherlands and has savings in a Dutch bank account, transferring these savings to a bank account in Indonesia before moving to Indonesia.

In this scenario, there are some important considerations regarding the tax treaty between the Netherlands and Indonesia:

Tax Resident Status:

1. Before the Dutchman moved to Indonesia, he was probably a tax resident of the Netherlands. This means that he was subject to Dutch tax law.
2. At the time he transferred the money to his bank account in Indonesia to buy the house, he was not yet a tax resident of Indonesia.
3. If the Dutch citizen lives in Indonesia and becomes a tax resident there, he may be subject to Indonesian income tax on any capital income (such as interest income from the savings account).
4. However, the tax treaty between the Netherlands and Indonesia stipulates that capital income (such as interest) is taxable in the country where the recipient is tax resident. Since he was not yet a tax resident of Indonesia at the time of the transfer, he might not have to pay tax in Indonesia on the money he set aside.

A person's tax residency status is critical. If the Dutch person becomes a tax resident of Indonesia, he may be subject to Indonesian tax law.
The treaty also determines which country has the right to tax income of a taxpayer who is a resident of both countries.

One of the AI sources for it's statement is :
How the Indonesia-Netherlands tax treaty enables tax avoidance
An analysis of the treaty and Indonesian court decisions on tax disputes
August 2019
Authors:
Cut Nurul Aidha & Ah Maftuchan (Prakarsa),
Maarten Hietland & Jasper van Teeffelen (SOMO)

 

[STH1984]

Hi all,

I have a question that kind of is related to this topic. It needs a little bit of explaining, so please bear with me.

Situation:
1. I live in Indonesia (on a ITAP) for about 8 months a year.
2. I live in the Netherlands (as a Dutch national) for 4 months a year.
3. I am a sole proprietor (in Dutch: ZZP-er) with a registered company in the Netherlands and with a Dutch company and tax number.
4. I pay my company's (VAT) and personal income taxes in the Netherlands.
5. My clients all are European clients
6. Because I live 8 months a year in Indonesia, I work out of Indonesia for 8 months of the year
7. Because I live 4 months a year in the Netherlands, I work out of the Netherlands for 4 months of the year.
8. In Indonesia I have ITAP status and have an active NPWP.

I live in the Netherlands for 4 months because that's the minimum time I need to spend there to be able to be registered as a citizen in the Municipal Registry, which I in turn need to be covered by the Dutch health-insurance system (I need the coverage due to my health condition).

Is there anything I need to do differently in terms of paying my taxes?

Do I need to file a report here in Indonesia? Do I need to pay (part of my, for example income tax) to the Indonesian tax office?

Is there anyone who can please help me with figuring this out, as I do not want to get in trouble with any tax authority either here in Indonesia, or back home in the Netherlands...

Thank you in advance.
- STH1984

 

[jstar]

Is there anything I need to do differently in terms of paying my taxes?

Well, there is a tax treaty between NL and RI. It clearly states what income is taxed where etc.

But this is important; it depends of course in which country you are tax resident. So where you are fiscally domiciled or established. You can’t have your main residence in multiple countries.

In most European countries the tax authorities determine your tax residence based on your personal situation and that includes where you spend most of your time, where your partner and/or family live, where you work. Even if you own property or where you have your medical care. Whether your company is considered 'tax resident in the Netherlands' is obviously determined by the place where management takes place.

If one has a permanent residence permit (ITAP), stays more than 183 days per year in Indonesia, and is married to a WNI whose KTP is in RI, I don’t see any tax authority considering the Netherlands as fiscal residence. Even if you spend 4 months per year there to avoid having to deregister from the civil registry and to stay (medically) insured.