NPWP, pre/postnup, gift taxes and purchase of land

[dafluff]

As an addendum to my post #17 above, the property purchased by the WNI should be declared by them as an asset on their tax filing IF they have or can get an NPWP. Many tax offices will not issue an NPWP to anyone, WNA or WNI, if they do not have income to report. In our case, my wife tried to get an NPWP and was refused because she doesn't work or have income to report, even though the tax office clearly understood that she owns real property and a car. Welcome to Indonesia!

Yep...this is so bizzare...why make it so hard to get NPWP? There is literally almost no cost to them beyond printing out a plastic card, and potentially a lot to gain from tax income...

 

[make_batik_great_again]

Yep...this is so bizzare...why make it so hard to get NPWP? There is literally almost no cost to them beyond printing out a plastic card, and potentially a lot to gain from tax income...

I have also read many times that people, espec. foreigners, have difficulties to get a NPWP. This is why I was surprised that my wife (Indonesian) and I got our NPWPs without any trouble. Maybe the tax offices handle this very differently or maybe they make it easier to get a NPWP lately.

 

[Jamu]

Yep...this is so bizzare...why make it so hard to get NPWP? There is literally almost no cost to them beyond printing out a plastic card, and potentially a lot to gain from tax income...

Agreed, although perhaps the thinking in some tax offices is that with a limited number of human resources, they want to focus on people who actually owe tax through the generation of income. Simply owning assets and reporting them annually on a tax form doesn't necessarily give rise to any tax payments, while at the same time it increases the human resources required to process these 'unproductive' returns. Indeed, the tax officer we met told my wife as much by saying they were concerned only whether she earned any income, not whether she owned assets.

 

[pantaiema]

I revive this discussion because it concerns a topic relevant to certain expatriates now or in the future. There may be individuals considering gifting properties, or other assets to their spouses without fully understanding the tax implication.
My understanding, based on UU_No_7_1983, is that gifts are exempt from taxation regardless of the amount received by the recipient. This is stipulated in Article 4
(3) Not included as Tax Objects are:
a. grant property or assistance that has nothing to do with the business or work of the party concerned.
b. inheritance;

But the newest law about income tax UU_No_36_2008 - The fourth revision of UU_No_7_1983 states :
Article 4, paragraph (3) Letter a.2:
Yang dikecualikan dari objek pajak adalah:
2. harta hibahan yang diterima oleh keluarga sedarah dalam garis keturunan lurus satu derajat, ...
Exemption from taxation is "Gift received by a family in a direct bloodline of descent of one degree, ...,directly related to one generation (up/down) in the straight bloodline.
This clarifies it is only applicable to children, father/mother, Grandpa, wife/husband are not in this category. So the person other than children, father/mother receiving gift might be subject to income or other taxes (?)

There are some useful documentations from international tax consultants and accountants, so it carries some weights.

https://www2.deloitte.com/content/dam/Deloitte/id/Documents/tax/id-tax-guide-2023-2024.pdf
Deloitte p85
Taxpayers must withhold Article 23 income tax on the following payment made to domestic taxpayers: Gift, awards, bonuses and similar items except for those that have been subject to EIT

PWC for instance is saying:
https://taxsummaries.pwc.com/indonesia/individual/other-taxes There are no inheritance, estate, and gift taxes in Indonesia. Income from lottery prizes is subject to a 25% final income tax.
https://www.pwc.com/id/en/pocket-tax-book/english/pocket-tax-book-2023.pdf

But another Indonesian tax consultant, accountant is confirming UU_No_36_2008 Article 4, paragraph (3) Letter a.2:

TAXATION ON INHERITANCE AND GIFTS IN INDONESIA

Purnomo Consult

purnomo-consult.com

In my opinion, PWC's statement "there are no inheritance, estate, and gift taxes in Indonesia" is accurate, as they specifically address these types of taxes, distinct from income tax. The recipient of the gift will be subject to income tax, rather than inheritance, estate, and gift taxes. Some countries do have inheritance, estate, and gift taxes in place.

What is your opinion on whether gifting is exempt from income tax in Indonesia?

 

[MamangDudul]

I revive this thread as this is the topic that some of the expats are facing or will be facing in the future. Someone might be gifting properties to their spouse and are not aware about the tax implication.

I understand that based on UU_No_7_1983 is that gift is exempt from the taxation irrespectively of the amount the gift that the person is receiving.
It says in article 4
(3) Not included as Tax Objects are:
a. grant property or assistance that has nothing to do with the business or work of the party concerned.
b. inheritance;

But the newest law about income tax UU_No_36_2008 - The fourth revision of UU_No_7_1983 state :
Article 4, paragraph (3) Letter a.2:
Yang dikecualikan dari objek pajak adalah:
2. harta hibahan yang diterima oleh keluarga sedarah dalam garis keturunan lurus satu derajat, ...
"Gift received by a family in a direct bloodline of descent of one degree, ...,directly related to one generation (up/down) in the straight bloodline.
This clarifies it is only applicable to children, father/mother, Grandpa, wife/husband are not in this category. So the person other than your wife receiving gift might be subject to income tax ...

There are some useful documentation from international tax consultants and accountants, so it carries some weights.

https://www2.deloitte.com/content/dam/Deloitte/id/Documents/tax/id-tax-guide-2023-2024.pdf
Deloitte p85
Taxpayers must withhold Article 23 income tax on the following payment made to domestic taxpayers: Gift, awards, bonuses and similar items except for those that have been subject to EIT

PWC for instance is saying:
https://taxsummaries.pwc.com/indonesia/individual/other-taxes There are no inheritance, estate, and gift taxes in Indonesia. Income from lottery prizes is subject to a 25% final income tax.
https://www.pwc.com/id/en/pocket-tax-book/english/pocket-tax-book-2023.pdf
https://www2.deloitte.com/content/dam/Deloitte/id/Documents/tax/id-tax-guide-2023-2024.pdf

But another Indonesian tax consultant is emphasizing the UU_No_7_1983 Article 4, paragraph (3) Letter a.2:

TAXATION ON INHERITANCE AND GIFTS IN INDONESIA

Purnomo Consult

purnomo-consult.com

View attachment 3903

IMO what PWC is saying "There are no inheritance, estate, and gift taxes in Indonesia" is true as they are referring to inheritance, estate, and gift taxes, not the income tax. The person receiving the gift might be taxed on their income, not based on inheritance, estate, and gift taxes the receive. In some countries in in some inheritance, estate, and gift taxes do exist.

What is your opinion about gifting in relation to income tax in Indonesia is it tax free or not ??

Iam not really smart about this, but there have been said a few interesting things in this thread. If someone is wiser or more confused than before is another thing.
Another thing is also how his will pan out in a tax office without a lawyer by your side.

But I think the problem here is not if gifts are tax free or not, which I don't doubt they are depending on the circumstances, but the problem seems to be in connection with prenups/postnups. How does this change the dynamics.

Also is good and important to have such threads, they should actually be pinned on the front page haha. More foreigners should know about potential problems and how to avoid them. Cause if you are already in the middle, how much control and law on your side do you still have.

 

[Samoerai]

Spouses with pre/post nup are not required to get NPWP and file separately, rather it is an option as per paragraph b of your link. Indeed, according to the link, it is only on fulfillment of one of the following options that the parties are required to get their own NPWP: paragraph a) legal separation of the parties; paragraph b) a request to the tax authorities by both spouses based on pre/post nup; or paragraph c) a request by wife to the tax authorities that she wants to be taxed separately.

And

Though, the reason why we have separate NPWP is not that we wanted to be taxed separately or not been seen as a economic entity. We simply received separate NPWP because my wife already had a NPWP and when applying for my NPWP, we were told a husband cannot join the wife´s NPWP (which is common procedure, as fas as I know). The only chance of having a shared NPWP would be that my wife asks for deletion of her NPWP and joins my NPWP then.

So, is it possible for the husband (WNA) to get the same NPWP as his wife (WNI)?

According to Jamu in theory "yes", but according to Make_batik_great_again "no". Theoretically "yes" but in practice "no".

Did any WNA get the same NPWP as his spouse (WNI)?

 

[Shadrach]

And

So, is it possible for the husband (WNA) to get the same NPWP as his wife (WNI)?

According to Jamu in theory "yes", but according to Make_batik_great_again "no". Theoretically "yes" but in practice "no".

Did any WNA get the same NPWP as his spouse (WNI)?

This post has my head spinning with so many abbreviations! The WNA has to practice the NPWP so the WNI doesn't get in a mess! I really don't GAF about all this BS! Maybe we should let MBGA or The UN decide, or follow what the UU or AUS, or RI or USA, or the WWF Has to say! WHEW that's all a lot to ponder! This might be AI generated! I think I need to drink some alcoholic Jamu to settle down my nerves!

 

[nd_eric_77]

And

So, is it possible for the husband (WNA) to get the same NPWP as his wife (WNI)?

According to Jamu in theory "yes", but according to Make_batik_great_again "no". Theoretically "yes" but in practice "no".

Did any WNA get the same NPWP as his spouse (WNI)?

My experience is that a foreign spouse can initially have the same NPWP as the Indonesian spouse... BUT when they do a post-nup to separate assets ("pisa harta"), the Indonesian spouse will need to report income separately since any real estate will only belong to the Indonesian spouse. I am not a lawyer or accountant; just sharing my lived experience.

 

[MamangDudul]

My experience is that a foreign spouse can initially have the same NPWP as the Indonesian spouse... BUT when they do a post-nup to separate assets ("pisa harta"), the Indonesian spouse will need to report income separately since any real estate will only belong to the Indonesian spouse. I am not a lawyer or accountant; just sharing my lived experience.

So that means it was like that in your case or in cases of people you know?
Cause in this thread and other threads there are actually a lot of theoretical discussions. One side cites a law, then another side cites in law and interprets it in another way.
But what we don't have here are a lot of actual cases of what people really did in the end or what happened in the tax office and how it is handled "in reality". Maybe that's hard to determine in Indonesia since a lot of people seem, private or institutions, seem to have their "own reality". Different places (as in tax offices for example) or officers seem to handle things differently. Some don't know this, some don't know that or maybe some know it all but still hold it against you or not. It's really a mess. Then nowadays we still have people being told that as long as you don't work no need to make an SPT ( even if you still have passive income in form of interests and so on) or even no need to have an NPWP. While in the end things might be very different and it bites you in the ass.
I know they say being stupid ( or ignorant, if you do it on purpose) doesn't protect you from punishment but there really needs to be more education about all of this.

 

[Samoerai]

My experience is that a foreign spouse can initially have the same NPWP as the Indonesian spouse... BUT when they do a post-nup to separate assets ("pisa harta"), the Indonesian spouse will need to report income separately since any real estate will only belong to the Indonesian spouse. I am not a lawyer or accountant; just sharing my lived experience.

Thanks for sharing your experience. You specifically say when husband and wife do a postnup.
1. Is it different for husband and wife with a prenup. Can they share the same NPWP?
2. Why would husband and wife disclose (to the tax authority) the info that they have a pre-or postnup?

 

[nd_eric_77]

So that means it was like that in your case or in cases of people you know?
Cause in this thread and other threads there are actually a lot of theoretical discussions. One side cites a law, then another side cites in law and interprets it in another way.
But what we don't have here are a lot of actual cases of what people really did in the end or what happened in the tax office and how it is handled "in reality". Maybe that's hard to determine in Indonesia since a lot of people seem, private or institutions, seem to have their "own reality". Different places (as in tax offices for example) or officers seem to handle things differently. Some don't know this, some don't know that or maybe some know it all but still hold it against you or not. It's really a mess. Then nowadays we still have people being told that as long as you don't work no need to make an SPT ( even if you still have passive income in form of interests and so on) or even no need to have an NPWP. While in the end things might be very different and it bites you in the ass.
I know they say being stupid ( or ignorant, if you do it on purpose) doesn't protect you from punishment but there really needs to be more education about all of this.

I personally know three Foreign + Indonesian couples who have done this process. Specifically, the requirement to report one's assets every year means that the major assets will need to be on a separate tax form (hence, separate NPWP).

 

[nd_eric_77]

Thanks for sharing your experience. You specifically say when husband and wife do a postnup.
1. Is it different for husband and wife with a prenup. Can they share the same NPWP?
2. Why would husband and wife disclose the info that they have a pre-or postnup?

1. I do not have any firsthand experience with prenups but would assume that the requirement is the same as for postnups.
2. I am not up on the latest property regulations, but as far as I know, getting a prenup that specifically separates assets is required for the Indonesian spouse to obtain the most preferable type of property ("hak milik"). When the government made it possible for foreigners to buy real estate, the regulation had several onerous requirements and did not even grant the strongest form of title.

nb: Of the couples I know, the only reason for having a postnup is for property rights; it is not like a celebrity prenup in Hollywood or anything like that.

 

[MamangDudul]

Just a friendly advice, Iam sure a lot of people read here. Don't give the "wrong" people the wrong ideas. Sure topics like this can be discussed but it should stay within a certain limit in my opinion. There are always more "guests" than actual members online.

 

[pantaiema]

Just a friendly advice, Iam sure a lot of people read here. Don't give the "wrong" people the wrong ideas. Sure topics like this can be discussed but it should stay within a certain limit in my opinion. There are always more "guests" than actual members online.

I wholeheartedly agree with this. It's better not to discuss any loophole, grey area, or 'gedogen' (tolerated practices in law) that people think authorities could exploit against them. In this expatindo, there is a 'cage' where people could free discuss without being afraid that the authority might be reading it. IMO we shouldn't help authorities to pinpoint these loopholes, grey areas, or 'gedogen'. People may continue capitalizing on them to their advantage while they last.

 

[Samoerai]

Ok, I just deleted my post.

 

[Robert100]

is there still no way to get a NPWP number on a B211 visa , if one stayed here for 183 days. I am approaching this soon. Next year I will have my investor visa, but still need to save a bit more to feel comfortable transfering the required 10 billion IDR to indonesia and open a company and buy a property. Don't want to go into debt for this.
Regardless it will def worthwhile for them to process my NPWP application. But I don't want to report for tax next year and they say, ah but you should have registered last year already or to apply pressure to me. I actually have an indonesian bank account and feel queezy earning interest there an no NPWP number. Is that not a good enough reason to get a NPWP number ? ( even if i was not supposed to have a bank account, but I do ) Earning interest is a passive income , so am not worried about emigration. I can even open a company with it , but can't be employed in the company or be a director until i have the investor visa.
what I really want is the NPWP number though. well really just want to have a company that can own property here, but I think this is the only way to get there.

 

[Brian86]

is there still no way to get a NPWP number on a B211 visa , if one stayed here for 183 days. I am approaching this soon. Next year I will have my investor visa, but still need to save a bit more to feel comfortable transfering the required 10 billion IDR to indonesia and open a company and buy a property. Don't want to go into debt for this.
Regardless it will def worthwhile for them to process my NPWP application. But I don't want to report for tax next year and they say, ah but you should have registered last year already or to apply pressure to me. I actually have an indonesian bank account and feel queezy earning interest there an no NPWP number. Is that not a good enough reason to get a NPWP number ? ( even if i was not supposed to have a bank account, but I do ) Earning interest is a passive income , so am not worried about emigration. I can even open a company with it , but can't be employed in the company or be a director until i have the investor visa.
what I really want is the NPWP number though.

Bank interest is automatically taxed by the bank, so that is no direct concern. Your situation is common and I would not be worried if I were you, just get the NPWP when you get the work/director visa.

 

[Robert100]

"Your situation is common and I would not be worried if I were you, just get the NPWP when you get the work/director visa." Yeah I am sure tax consultants are tired of getting asked this..

Situation that I foresee:
Current -> 183 days.-> 9 more months passes -> Company->Kitas,Director,NPWP. That then leaves this uncertain.. tax applied from when ?
So kind of prefer :
Current-> 183 days -> NPPW ->9 months-> Company->Kitas, Director. Tax begin date is clear, no penalties now or in future.