Remote work with a spouse KITAS visa - the how

[marcus]

What about IT-freelancing for companies abroad while residing in Indonesia with E31A-ITAS? Does it fall under work, which requires a work permit (IMTA)?

As Helpful Herbert said , 'work permit' cannot be issued to companies based outside Indonesia .

But what you do is considered work , so to make it legally clear to Immigration I suggest you to talk to your local 'Kantor Imigrasi' about your situation (see below what Immigration states) .

If the Immigration is concerned about the Indonesian Tax Law , you may propose to pay income tax through an Indonesian small business that your Indonesian spouse can set up for this purpose . This way you pay a very low tax and maybe can also provide services to companies/businesses based in Indonesia .

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From https://evisa.imigrasi.go.id/web/visa-selection

Type of Visa E31A - 1 YEAR​

.....
5. Other information
.....
e. You are prohibited from working by receiving compensation, wages, or any similar from individuals or companies in Indonesia, unless reported to immigration (using the multiple activity reporting process).

Poster's Note : The information above is also applicable to ITAS or ITAP resulted from this Visa .

 

[pantaiema]

What about IT-freelancing for companies abroad while residing in Indonesia with E31A-ITAS? Does it fall under work, which requires a work permit (IMTA)?

When you take on freelance remote work for a company abroad, you are not competing with or replacing local workers, so the manpower department who issue work permit (IMTA/RPTKA) won’t be concerned.

The key issue here is that you have an income and an ITAS. Having an ITAS/ITAP you are considered a tax resident of Indonesia. As Indonesia applies a global taxation system, all of your income, including earnings from overseas, is subject to Indonesian tax, while also taking into account any applicable Double Taxation Avoidance Agreements. I remember reading a case a person under spouse sponsored ITAS get caught for renting their home abroad without reporting it as an income.

I believe this is one of the main reason why they issue E33G for Remote Worker, so they could easily identify who are doing a remote work while having an Indonesian residence.

 

[centurion]

What about IT-freelancing for companies abroad while residing in Indonesia with E31A-ITAS? Does it fall under work, which requires a work permit (IMTA)?

Short answer - should be ok without work permit.

 

[savin399]

Hello, I've been reading the posts related to remote work on a KITAS visa, and the earliest source I found dates from 2020. If the admins find it necessary they can join my post with one of these, but I am here to ask a specific question

I am married to an Indonesian, so I am here with a spouse KITAS. Reading from the other posts, I found it pretty obvious that I can work remotely, although the officials can interpret differently.

My question is about the how: I won't have a legal residence in the country of my new job. I wonder if I should create my own consulting company here in Indonesia, or if it is okay to have a direct contract with the foreign company.

What would be the best way for that, also considering tax?

I struggled with the same question when I first came on a spouse KITAS. The tax part is tricky because technically you’re not a resident in Indonesia for work purposes, but you’re still tied to the US system.

I changed my legal domicile through SavvyNomad. They basically prepped all the forms for Florida residency, even the notary and DMV appointment. After that, everything tax-related became way easier to manage remotely.

 

[marcus]

I struggled with the same question when I first came on a spouse KITAS. The tax part is tricky because technically you’re not a resident in Indonesia for work purposes ...

I am not sure if I understood what you meant , but in my view , when you have a KITAS (residence permit) , you are also an Indonesian "Resident Tax Subject" , meaning you are supposed to pay Indonesian Income Tax (if the case) over your worldwide income , regardless of if you are in Indonesia for work purposes or not .

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Omnibus Law (UU no.11 Year 2020) - free translation
Article 1 1 1 (page 617 in my pdf copy - free translation)
Several provisions ... concerning Income Tax ... are amended as follows:

(1) Tax Subjects are:
a. private person; and ...
(2) Tax Subjects are differentiated into Inside/Domestic/Resident Tax Subjects and Outside/Abroad Tax Subjects.
(3) The Inside/Domestic/Resident Tax Subjects are:
a. private persons, whether they are Indonesians or foreigners, who:
1. reside in Indonesia;
2. has been in Indonesia for more than 183 days within a period of 12 months; or
3. in a tax year, are residing in Indonesia and have the intention to reside in Indonesia;

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Explanation of Article 111, Article 2 of UU no.11 Year 2020 - free translation

a. Inside/Domestic/Resident Taxpayers are taxed on income either received or obtained from Indonesia or outside Indonesia, ...

 

[pantaiema]

I struggled with the same question when I first came on a spouse KITAS. The tax part is tricky because technically you’re not a resident in Indonesia for work purposes, but you’re still tied to the US system.

There are already a lot of discussions about this

I fully believe this bit comes from the group of people who want you to do the same to what they have been doing and keep spreading this information. If they have not got caught it does not mean they will not get caught.

I personally don't think the tax part is tricky, if you have an ITAS / ITAP, stay in Indonesia or reside in Indonesia for more than 183 days you are an Indonesian tax resident. 183 days resident rule typically applies to many countries in the world. Keep in mind considering one year is only 365 days noone will be able to reside 183+ days in two countries.
Indonesia adopts a global taxation system. So if you are an Indonesian tax resident it does not matter where you earn your income, all of your incomes from different countries combined will attract Indonesian income tax. Certainly it takes into consideration the DTA agreement between the two countries to ensure you will not be taxed twice for the same income.

If you want to be sure, You need to get confirmation immigation, manpower and tax office in WRITING. using the offical communication channel. Doing this you have a formal defence when you or your lawyer need it.

Why do you think they bother to create a new visa index E33G Remote Worker (Digital Nomad) VITAS ??

 

[harryopal1]

I receive an aged pension entitlement in Australia which is below the Australian taxable threshold so do not pay tax on that. I put these funds into an Australian savings bank account and then from time to time draw funds from my saving account to cover living expenses in Indonesia. I have a permanent residence status. I do not work in Indonesia so do not have a tax file and do not pay taxes. What is my position in relation to using savings sent to my Indonesian account. Is this supposed to be taxable income?

 

[marcus]

... Why do you think they bother to create a new visa index E33G Remote Worker (Digital Nomad) VITAS ??

I guess that the main reason for offering this visa is to bring more foreigners to Indonesia , following example of many other countries .

I don't know what was the contribution of this specific visa (introduced in Aug 2023 by PerMen no.22 Year 2023) , but the number of foreigners coming to Indonesia in the first semester of 2024 increased 7.28% .

I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia (the last year's Finance Minister had a similar idea about it) .

 

[marcus]

I receive an aged pension entitlement in Australia ... What is my position in relation to using savings sent to my Indonesian account. Is this supposed to be taxable income?

From https://datacenter.ortax.org/ortax/treaty/show/2 (INCOME TAX AGREEMENT BETWEEN INDONESIA AND AUSTRALIA)

Article 18
PENSIONS AND ANNUITIES​

1. Pensions (including government pensions) and annuities paid to a resident of one of the Contracting States shall be taxable only in that State.
2. Notwithstanding the provisions of paragraph 1, a pension (including a government pension) or an annuity paid to a resident of one of the Contracting States from sources in the other Contracting State may be taxed in that other State but the tax so charged may not exceed 15% of the gross amount of the pension or annuity.
3. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth...​

 

[harryopal1]

I guess that the main reason for offering this visa is to bring more foreigners to Indonesia , following example of many other countries .

I don't know what was the contribution of this specific visa (introduced in Aug 2023 by PerMen no.22 Year 2023) , but the number of foreigners coming to Indonesia in the first semester of 2024 increased 7.28% .

I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia

From https://datacenter.ortax.org/ortax/treaty/show/2 (AGREEMENT BETWEEN INDONESIA AND AUSTRALIA)

Article 18
PENSIONS AND ANNUITIES​

1. Pensions (including government pensions) and annuities paid to a resident of one of the Contracting States shall be taxable only in that State.​
2. Notwithstanding the provisions of paragraph 1, a pension (including a government pension) or an annuity paid to a resident of one of the Contracting States from sources in the other Contracting State may be taxed in that other State but the tax so charged may not exceed 15% of the gross amount of the pension or annuity.​
3. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth...​

Marcus, thank you for the above but I am still not certain as to my position. As my pension is below a taxable threshold in Australia I am not taxed in Aus. Still not sure from the above if that leaves me with a tax concern here.

 

[harryopal1]

I guess that the main reason for offering this visa is to bring more foreigners to Indonesia , following example of many other countries .

I don't know what was the contribution of this specific visa (introduced in Aug 2023 by PerMen no.22 Year 2023) , but the number of foreigners coming to Indonesia in the first semester of 2024 increased 7.28% .

I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia (this was verbally stated by the last year's Finance Minister , but she failed to change the rule in the 2020's Omnibus Law) .

Marcus, can you provide any reference to this statement. "...I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia (this was verbally stated by the last year's Finance Minister".

I just used ChtGpt to check Indonesian tax laws as to whether I am liable for tax and had this reply below. Given the fallability of AI i just hope this information is reliable.

"Are you taxable in Indonesia?

Short Practical Answer:​

No — you are not currently liable for Indonesian tax, because:

1. You have no Indonesian-source income.
2. You have not registered as a taxpayer (NPWP).
3. Indonesia has never required you to register.
4. Your only income is a foreign government pension that Indonesia has not historically enforced taxation on for retirees.
5. The money you transfer from Australia is not considered income, only moving your own assets.

Treaty aspect (simple explanation)​

While the Indonesia–Australia tax treaty allows Indonesia to tax foreign pensions if a person is formally an Indonesian tax resident, Indonesia does not generally enforce this on retirees who are not working and who are not in the tax system.


In practice:

• If you do not have an NPWP
• And you do not earn Indonesian income
• And no authority has ever required tax registration

Then Indonesia does not treat you as a taxable person.

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Do you need to register for Indonesian tax?​

Realistically: No.​

Millions of foreign retirees live in Indonesia, Thailand, Malaysia, and the Philippines in similar situations.
None are required to register for tax unless they have local income or business.


You have lived in Indonesia for years:

• never requested to register
• no tax obligations imposed
• immigration only checks you have sufficient funds, not the source

That is normal and expected.

---

Does your Australian pension create a tax obligation in Indonesia?​

In practice: No.​

Indonesia does not tax:

• foreign pensions
• foreign savings
• foreign transfers
  unless you formally declare yourself a tax-paying resident by registering for an NPWP.

You have not done that, and there is no requirement that you do.

 

[harryopal1]

Marcus, back to my question, can you provide any reference to this statement. "...I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia (this was verbally stated by the last year's Finance Minister".

 

[Helpful Herbert]

That's actually a surprisingly good answer from chatgpt. They will put tax consultants out of a job.

 

[marcus]

Marcus, back to my question, can you provide any reference to this statement. "...I believe that Indonesia still doesn't want to enforce the Tax Law on foreigners not receiving work income from Indonesian based companies , because this would decrease the foreigners' interest to live in Indonesia (this was verbally stated by the last year's Finance Minister".

I had an old article that I posted in the old Forum but forgot to keep a copy .

 

[marcus]

... As my pension ... Still not sure ... if that leaves me with a tax concern here.

In my view , and reading some Indonesian articles , pension is taxed in Indonesia . Adding to that , the Tax Treaty between Australia & Indonesia does not exempt your pension to be taxed in Indonesia , so according to the Indonesian Tax Law your Australian pension may be taxed like any other type of worldwide income .

But , as I said before , in more than 20 years in Indonesia I still didn't hear of any foreigner (who doesn't have Indonesian work/business income) be required to pay Indonesian income tax (except taxes automatically retained by , for example , banks) .

 

[marcus]

That's actually a surprisingly good answer from chatgpt. They will put tax consultants out of a job.

I personally think many of those answers are not appropriate .

 

[pantaiema]

Law No. 7 Year 1983 About income Tax Article 24
"Wajib Pajak dalam negeri dikenakan pajak atas semua penghasilan dari manapun diperoleh, termasuk penghasilan yang diperoleh dari sumber penghasilan di luar negeri.

Atas penghasilan yang diperoleh dari luar negeri tersebut, dengan sendirinya telah dikenakan pajak
oleh negara asal penghasilan tersebut. Pajak Penghasilan yang telah dibayar di negara asing tersebut dapat dikreditkan terhadap seluruh Pajak Penghasilan yang terhutang, sepanjang mengenai tahun pajak yang sama."

"Domestic resident taxpayers are subject to tax on all income wherever derived, including income obtained from sources of income abroad.

Income obtained from abroad is automatically subject to tax by the country of origin of the income. Income Tax that has been paid in the foreign country can be credited against all Income Tax payable, as long as it concerns the same tax year."

 

[pantaiema]

Do you need to register for Indonesian tax?

Just be careful with the answer from AI without reference to authoritative sources such as Law (UU), regulations, etc. AI is good for initial answer to dig the matter further, but not to be used in critical matter. I have read a few stories people have lost money in investing solely from asking the prediction from AI. It is just a probability but if the probability is much higher, you should win if you do it multiple times. But they have warned you for using AI in investing, or for making judgement, defence such as in the court room do not they.

I asked exactly the same question, word for word:
'Do you need to register for Indonesian Tax ?'
See the answer below from Chat GPT, and Google Gemini (attached). I personally do not believe the answer from AI before I check it from the authoritative sources.

 

[pantaiema]

Does your Australian pension create a tax obligation in Indonesia?

I also ask exactly the same question word for word
'Does your Australian pension create a tax obligation in Indonesia?'
See the response from chatGPT, and Google Gemini (attached)

 

[mas_dam]

Whenever I read DTA texts, I wonder whether there is no better linguistic solution than the constant usage of "in that state" and "in the other state". I find DTAs to be one of the most annoying legal texts to read!

@pantaiema
I share your opinion: DON'T TRUST AI!
It would have been nice though if you had not just shared the AI replies, but also pointed out how this is a nice example of hallucinating AI and what absurdly wrong statements it produces:

Tax Treaty Source:

ChatGPT cannot even read this Article and creates this absurd statement:
"If you live in Indonesia (and are a tax resident): Your Australian pension is likely to be
taxable in Indonesia, but the double tax treaty limits how much Indonesia can tax it
(max 15%)."

It's clearly not true.
The max. 15% taxable is for Australia, Indonesia can fully tax it.
The logic of DTA is that an additional Indonesian % tax rates (i.e. progressive income tax rates that bring you to higher brackets) would be deducted by the 15% that you already paid in Australia. Hence, avoiding a double tax of that 15% part.

DTA doesn't mean that only one of the two countries can tax you for the same income source/type in general.