Retired Expat, no Indonesian income: Do they need NPWP?

[Davita]

The situation in Indonesia is they have laws but they don't obey their own rules and we are left at their mercy.
I believe we all understand Indonesian law on taxing foreign residents world-wide income but the taxman, up 'till now, doesn't appear keen to pursue retirees under the law......and the day they do most retirees would leave as the tax is 30% on taxable income over Rp 500M....and the deductible (about Rp 6M for a couple) is ridiculously low.
My annual expenses are more than that and we get nothing....no NHS; no NI; no votes; no welfare system and few police around when you get mugged.
I'm happy to 'contribute' 20% of the interest accrued in my FD's in RI but I wouldn't be happy to pay taxes on earnings from outside....where I'm already taxed.
I know about a dozen living in Indonesia on retirement Kitas/Kitap, longer than 183 days per annum, and none of them have an NPWP.

 

[Daniel50]

The situation in Indonesia is they have laws but they don't obey their own rules and we are left at their mercy.
I believe we all understand Indonesian law on taxing foreign residents world-wide income but the taxman, up 'till now, doesn't appear keen to pursue retirees under the law......and the day they do most retirees would leave as the tax is 30% on taxable income over Rp 500M....and the deductible (about Rp 6M for a couple) is ridiculously low.
My annual expenses are more than that and we get nothing....no NHS; no NI; no votes; no welfare system and few police around when you get mugged.
I'm happy to 'contribute' 20% of the interest accrued in my FD's in RI but I wouldn't be happy to pay taxes on earnings from outside....where I'm already taxed.
I know about a dozen living in Indonesia on retirement Kitas/Kitap, longer than 183 days per annum, and none of them have an NPWP.

Yes, well it is requirement/law everyone needs KTP now E-KTP but one small problem, most of the money was stolen by the people in charge. You must pay taxes problem eg. mid level taxman Gayus enriches self and is out of prison watching tennis matches. You must have NPWP and are taxed on wordwide income, small problem tax people wont give to retirees/not working people ( even though on the books people are taxed on worldwide income after 183 days) but NPWP is "required" by banks due to gov't directive,well most of the time anyways. The taxman/system is so far behind getting taxes from Indonesians they can't be bothered with "relatively" small overseas income. However, who knows when this could change and when/or if it does, then will they try to make people responsible for all the unpaid taxes? Who knows, so as with a lot of life in Indonesia there is a greater level of uncertainty. Call the police for a break in, any help.......maybe/try to shake you down for more possibly. So just leave the police out of it etc. etc. etc. and life carries on.

 

[Anglian]

Yes, well it is requirement/law everyone needs KTP now E-KTP but one small problem, most of the money was stolen by the people in charge. You must pay taxes problem eg. mid level taxman Gayus enriches self and is out of prison watching tennis matches. You must have NPWP and are taxed on wordwide income, small problem tax people wont give to retirees/not working people ( even though on the books people are taxed on worldwide income after 183 days) but NPWP is "required" by banks due to gov't directive,well most of the time anyways. The taxman/system is so far behind getting taxes from Indonesians they can't be bothered with "relatively" small overseas income. However, who knows when this could change and when/or if it does, then will they try to make people responsible for all the unpaid taxes? Who knows, so as with a lot of life in Indonesia there is a greater level of uncertainty. Call the police for a break in, any help.......maybe/try to shake you down for more possibly. So just leave the police out of it etc. etc. etc. and life carries on.

What country in the world is not interested in its citizens or its foreign residents paying tax, how do you get a NPWP if the tax office isn't interested in you(at the moment) getting a bank account is a bit hit or miss, really depends on each individual bank branch, what sort of country allows its ID system to be so totally screwed, you wouldn't have minded a few million taken , not the fucking lot, do they not have accountants that over see government expenditure, how did they think they would get away with it, you couldn't make this up,
Regarding burglaries, we had a burgalary, if we paid one million they would get a tracker dog, brilliant, the thieves left in an ankot bus, the police kept coming back to chat up my daughter, she soon squashed them of that idea, oh well I'm to old now to give a shite, oh and don't mention maids, most as useless as tits on a bull, pretty good at nicking stuff though I could write I'd book on maids we've had

 

[mauricio]

4. Wrong see 1.

I was just being naughty Smallworld, the magic word is "retired expat", there is no law that says they have to apply for NPWP .

 

[Anglian]

I was just being naughty Smallworld, the magic word is "retired expat", there is no law that says they have to apply for NPWP .

Well I suppose most retired expats haven't applied for an NPWP, but have applied to pay tax like myself, once you pay tax you get your NPWP, personally to my way of thinking you should get a NPWP even if you don't earn enough, and fill in your yearly tax forms, this must be the only country in the world were they aren't interested in screwing you for tax

 

[Davita]

I was just being naughty Smallworld, the magic word is "retired expat", there is no law that says they have to apply for NPWP .

I suggest you are being pedantic.
There may not be a 'law' that specifically says that 'retired expats' need to apply for an NPWP but there is a law requiring all residents (defining what a resident is) to file for taxes on their world-wide income. Any foreigner who stays in Indonesia more than 183 days come under that law. The administrative method used to file for taxes in Indonesia is to complete an application for an NPWP number.

 

[mauricio]

The situation in Indonesia is they have laws but they don't obey their own rules and we are left at their mercy.
I believe we all understand Indonesian law on taxing foreign residents world-wide income but the taxman, up 'till now, doesn't appear keen to pursue retirees under the law......and the day they do most retirees would leave as the tax is 30% on taxable income over Rp 500M....and the deductible (about Rp 6M for a couple) is ridiculously low.
My annual expenses are more than that and we get nothing....no NHS; no NI; no votes; no welfare system and few police around when you get mugged.
I'm happy to 'contribute' 20% of the interest accrued in my FD's in RI but I wouldn't be happy to pay taxes on earnings from outside....where I'm already taxed.
I know about a dozen living in Indonesia on retirement Kitas/Kitap, longer than 183 days per annum, and none of them have an NPWP.

Yes, I believe "most retirees would leave". And having NPWP now complicates things later if you decide to stay less than 183 days per annum in Indonesia. Maybe live in one country for 120 days, then another country for 120 days, and the rest of the year in Indonesia.

 

[Smallworld]

I was just being naughty Smallworld, the magic word is "retired expat", there is no law that says they have to apply for NPWP .

Hahaha...Yes I imagine you are naughty, me as well. Although I am not retired I feel as if I am while living in Indonesia. My post was triggered by few similar posts (not only yours) about tax and banking and the attitude "I have no NPWP tax office will not find me and fine me". Maybe not for now...but in the near future who knows. Especially after banking system will provide tax office with all information.

The law says "pay taxes" it is as simple as that. Pay taxes = to have NPWP, no NPWP = no paid taxes = penalty. The court will not penalize you for not having NPWP but for not paying taxes. How easy it would be to sort that data against foreigners without NPWP? Kantor pajak will check all your data back 30 years for tax.

Oh one more thing: Once you get the summoning letter from tax office you need to know YOU HAVE TO attend and explain yourself. Ignoring it would mean you have a good lawyer and a load of cash. You can still negotiate and pay part of the penalty. After 2nd letter you will receive court summoning letter. This is "check mate".

Now this "black scenario" will take some time to be implemented but keep in mind:
- tax amnesty was done - so saying I am sorry and pay x% penalty is not an option anymore
- banks are forced to share info with inland revenue - pending

Dalam Undang-Undang Nomor 11 Tahun 2016 tentang Pengampunan Pajak disebutkan, jika Ditjen Pajak menemukan data harta Wajib Pajak (WP) yang diperoleh sejak 1 Januari 1985 sampai 31 Desember 2015 dan belum dilaporkan dalam SPT PPh, maka dianggap sebagai tambahan penghasilan WP pada saat ditemukannya harta itu paling lama tiga tahun sejak UU berlaku

Atas tambahan penghasilan tersebut, WP dikenakan PPh tarif normal, plus sanksi administrasi perpajakan 200 persen dari PPh yang tidak atau kurang dibayar.

"Itu artinya, 90 persen dari kekayaan WP diambil pemerintah, 200 persen penaltinya. Yang tadinya punya rumah mewah bisa tinggal di gubuk, punya mobil jadi sepeda motor," kata Sofjan.

To be honest I don't know how long we will live under the radar. But for a foreigner who lives on a pension you are receiving money via bank transfer from abroad you may be on higher risk to be checked up by inland revenue. Of course if the tax office wishes to do so.

 

[Davita]

For Interest...my wife just got off the phone with our Bank Manager at head office in Jakarta and brought up the subject of not having NPWP and the possibility of tax scrutiny of our fixed deposits.The Manager said, as foreigners, we aren't even included on the tax reporting requirement so we shouldn't do anything about getting an NPWP.
This is what we have previously believed. The law isn't being applied but it still leaves the foreigner in a difficult situation should the Gov't change their mind...which often happens here.

 

[dafluff]

For Interest...my wife just got off the phone with our Bank Manager at head office in Jakarta and brought up the subject of not having NPWP and the possibility of tax scrutiny of our fixed deposits.The Manager said, as foreigners, we aren't even included on the tax reporting requirement so we shouldn't do anything about getting an NPWP.
This is what we have previously believed.

Thanks for this info...this is indeed very interesting. Especially the bolded part.

The law isn't being applied but it still leaves the foreigner in a difficult situation should the Gov't change their mind...which often happens here.

This is the drive for me asking the question in the OP. Eventually someone's going to say, hey wait a minute, we have this law about 183 day residency, doesn't say anything about visa or nationality....so maybe we should start looking into some of these guys...

 

[Davita]

This is the drive for me asking the question in the OP. Eventually someone's going to say, hey wait a minute, we have this law about 183 day residency, doesn't say anything about visa or nationality....so maybe we should start looking into some of these guys...

You've hit the nail on the head...hopefully they'll find big fish and ignore us small fry but, knowing the veracity of Indonesian xenophobia, I wont hold my breath. Now working on a plan B.

 

[Smallworld]

Maybe we should wait and see what will happen after the banking system will start to share its customers information with the tax office. What kind of reply from the tax officer, banking staff/manager will give us?

Please notice that none of us here has got any written proof or law paragraph saying "...we no NPWP people on pension or not working don't have to pay tax in Indonesia from whatever income we have". We rely on their opinions here. One more thing: we are talking here about individual taxation which in case you got called by tax office you can't explain yourself or your actions by saying.... bank manager/other tax officer said so, ... as they could mislead you.

FYI I also went to assist my wife to tax office in Jakarta (was told it is for foreigners and foreign corporations branch). While chatting we asked about tax and foreigners working in Indonesia. His reply was: "If you have no job - no business the tax office is not interested in you". I haven't asked them about pension income from abroad as well as pocket money/gifts from family here in Indonesia.

As for banking I was told by several people: "...you don't have to worry". But nothing else more specific. What makes me feel calm is that it is told by several different people in different institutions as well here on the forum I got confirmation from you guys.

 

[Anglian]

I hate when people say, "You don't have to worry"

 

[CaturMuka]

I hate when people say, "You don't have to worry"

Me too. It also reminds me of something someone said on this forum (can't remember who, sorry), that is, that sometimes Indonesians think they're doing you a favour when in fact they're doing nothing of the sort.

In this context, it would be telling you to not worry about your tax situation which probably won't count for much if you're ever caught up in a tax audit.