As Iāve already emphasized, the key issue is determining in which countries you are considered a tax resident. The ā183-day ruleā is explicitly stated in the tax laws of many countries, not only Indonesia. Since a year has only 365 days. So If looking into this criteria alone noone can be the tax resident of two countries.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:
View attachment 5277
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.
To confirm whether foreign income are exempt from taxation in Indonesia as some people in this thread argue, there must be an authoritative reference such as a law, regulation, or a relevant treaty like a Double Tax Agreement (DTA) that specifically states this.
Tax laws from Australia or any other country have no jurisdiction (legal effect) in Indonesia if you are an Indonesian tax resident. Their provisions only matter if a bilateral treaty, such as a DTA, or another international treaty overrules them. But as you say DTA doesn't explicitly say that only one of the two countries can tax you. But it can be credited to the country where you are the tax resident. From the Indonesian inciome tax law counterpart, it is clearly stated in here: Law No. 7 Year 1983 About income Tax Article 24
"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."
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