Hi everyone,
We are in the planning phase to relocate from the US to Indonesia in 3 years.
Background:
- US citizens planning relocation to the Jakarta / Tangerang area.
- Ex-WNI (former Indonesian citizens). We grew up in Indonesia, speak the language, and are familiar with the culture.
- We plan to stay in Indonesia for 4–5 years before moving back to the US.
- While in Indonesia, we will be retired and not working.
- During our stay, our income will strictly come from dividends, interest, and US Treasury bills/bonds in a US taxable account.
- We are NOT going to withdraw from our retirement accounts (Traditional IRA, Roth IRA, or Social Security).
- Visa: We are eligible for GCI, but we need to research whether a different visa (e.g., E32A vs. E32E) is more suitable for a 4–5 year stay.
- NPWP: I do not have an NPWP; my wife has an inactive NPWP.
Goal: Tax planning to optimize and minimize Indonesian tax liabilities legally.
Our understanding thus far:
1. We will become Indonesian tax residents and subject to standard resident worldwide taxation rules (Indonesia taxes worldwide income for residents).
2. Since we will not be working, we will not qualify for the 4-year foreign expert / specialized skills territorial tax regime.
3. While the US and Indonesia have a Double Tax Treaty (P3B), if our US income tax liability on these specific funds is negligible/$0, foreign tax credits (FTC) won't help offset Indonesian income tax with the Directorate General of Taxes (DGT).
Please let us know if our understanding is incorrect.
Our questions:
1. Recommendation Request: Can anyone recommend a qualified Indonesian tax advisor or CPA firm in the Jakarta/Tangerang area with hands-on experience in US expat tax planning? (Looking for boutique/local firms experienced with US tax interactions, not Big 4).
2. NPWP Requirement: As non-working Indonesian tax residents living on offshore passive income, is registering for an NPWP strictly required/enforced? (I have read conflicting forum responses).
3. First-Year Asset Declaration: On the initial Indonesian Annual Tax Return (SPT Masa/Tahunan), must all global/US assets be declared on the SPT asset schedule? How strictly is foreign asset reporting scrutinized for temporary residents?
4. Interest & Dividend Taxation: My understanding is that interest (e.g., T-bills/bonds) and non-exempt dividends are taxable under worldwide taxation rules, regardless of whether funds are remitted to a local Indonesian bank. Is this accurate in practice?
5. Foreign Dividend Incentive (PMK 18/2021): Has anyone successfully utilized the PMK 18/2021 foreign dividend tax exemption by reinvesting offshore dividends into qualifying Indonesian assets (e.g., bank term deposits, SBN) for 3 years? How complex is the annual realization reporting (Laporan Realisasi) in practice?
6. IRAs & Retirement Accounts: Our Traditional and Roth IRAs generate internal dividends and capital gains that are automatically reinvested. Assuming zero distributions/withdrawals are made while living in Indonesia, do undistributed earnings inside US IRAs create any current Indonesian tax liabilities or annual SPT reporting obligations?
Thanks in advance for your insights!
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