Tax Reporting for Overseas Property & Income

Fabius77

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There some questions I would like to ask about reporting overseas property & income in Indonesia.

First, I gather it should all be reported. What about overseas properties I acquired before becoming an Indonesia fiscal resident, would those be subject to taxation?
What about money in bank accounts?

Second, eventual money transfers from an overseas account to an Indonesian account both on my name, how would they be considered? As income, or what?

If these questions have been answered before, feel free to point me to the right posts/threads.
 

centurion

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There some questions I would like to ask about reporting overseas property & income in Indonesia.

First, I gather it should all be reported. What about overseas properties I acquired before becoming an Indonesia fiscal resident, would those be subject to taxation?
What about money in bank accounts?

Second, eventual money transfers from an overseas account to an Indonesian account both on my name, how would they be considered? As income, or what?

If these questions have been answered before, feel free to point me to the right posts/threads.
If you have reported your offshore assets/money on the first tax report, they would not be subject to taxation. In that case, transfers would be just transfers (not income).

These questions were asked before. Regulations are very clear(you are a tax resident at the moment of KITAS, irrelevant of 183 days residency, with maybe a few debatable exceptions-i.e. investor-commissioner/director that has a KITAS but does not have a tax number and is not in most of the year in the country), but implementation is loose.
 

dafluff

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There some questions I would like to ask about reporting overseas property & income in Indonesia.

First, I gather it should all be reported. What about overseas properties I acquired before becoming an Indonesia fiscal resident, would those be subject to taxation?

Of course property and income obtained before you become an Indonesian tax resident are not taxable.

When you file your first tax report in Indonesia, you should declare (incl. $$ amount) every significant asset (bank accounts, house/land, retirement accounts, art, gold, etc), both in Indonesia and abroad. This establishes those assets as being yours prior being taxable in Indonesia.

What about money in bank accounts?

Especially money in bank accounts, since these are now subject to Common Reporting Standard.

Second, eventual money transfers from an overseas account to an Indonesian account both on my name, how would they be considered? As income, or what?

If the money is not new income since becoming an Indonesian resident and has been reported as above, then it is just a transfer.
 

Fabius77

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I understand. If assets were not reported at first, what is the situation?
 

dafluff

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I understand. If assets were not reported at first, what is the situation?

You have to file corrections going back to when you first became an Indonesian tax resident, or until June this year, participate in voluntary disclosure (tax amnesty), and pay a fine of up to 18%.
 

IndoTom

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Of course property and income obtained before you become an Indonesian tax resident are not taxable.

When you file your first tax report in Indonesia, you should declare (incl. $$ amount) every significant asset (bank accounts, house/land, retirement accounts, art, gold, etc), both in Indonesia and abroad. This establishes those assets as being yours prior being taxable in Indonesia.



Especially money in bank accounts, since these are now subject to Common Reporting Standard.



If the money is not new income since becoming an Indonesian resident and has been reported as above, then it is just a transfer.
Is Indonesia actually requiring foreigners living in Indonesia on a ITAS or ITAP to file a declaration on their assets back in their home country? I find this difficult to believe it's exists or is being enforced.
 

dafluff

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Is Indonesia actually requiring foreigners living in Indonesia on a ITAS or ITAP to file a declaration on their assets back in their home country?
Yes. Not just home country, but worldwide.

I find this difficult to believe it's exists or is being enforced.
There was a thread here not that long ago where this exact thing became a problem.

Edit: Here it is: https://www.expatindo.org/community/threads/tax-in-the-new-era.6474/#post-85400
 

IndoTom

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Yes. Not just home country, but worldwide.


There was a thread here not that long ago where this exact thing became a problem.

Edit: Here it is: https://www.expatindo.org/community/threads/tax-in-the-new-era.6474/#post-85400
This is all hard to believe! It makes no financial sence to retire to Indonesia as a foreigner if they will tax my global income. The immigration department didn't have any mention about having to file an Indonesian tax report if not working here. Is the tax office only investigating foreigners that file a tax report in Indonesia?
 

centurion

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It is not about the immigration authorities but tax authorities. Immigration has no authority about checking tax reports.

In practice, the tax authorities are not (yet?) investigating foreigners filing tax reports in most cases, but sometimes there are some questions.
 

IndoTom

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It is not about the immigration authorities but tax authorities. Immigration has no authority about checking tax reports.

In practice, the tax authorities are not (yet?) investigating foreigners filing tax reports in most cases, but sometimes there are some questions.
Would you say the tax department is now enforcing the tax rules more on foreigners? I'm guessing the "powers that be" are trying to collect money anywhere they can find it and are checking under mattresses and under dusty rugs
 

IndoTom

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Can I get the expat members on this forum to give their opinion if it is worth living in Indonesia if they have to pay indonesian taxes on their global income from outside the country? Perhaps someone that knows how could post a survey on the forum to get some statistics?
 

IndoTom

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I think most people on this forum would prefer you to stop highlighting it and brush it back under the rug.
I wish the expat that described his experience with the tax authorities in Indonesia confronting him with a 18% tax bill on his Singapore bank assets wasn't real and could be brushed under the rug! But this issue needs to be watched carefully so "we" can be kept ware if it's becoming a trend. In Indonesia there has always been a disconnect between the law and implementation of it. Sometimes to our benefit, sometimes it causes problems. It seems Indonesia is now using the "Common Reporting Standard" financial system to our detriment. https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/

Only a few countries in the world tax expat residents on their "world wide income". The United States is of course one of them, but people tolerate it because of the benefits associated with living there. Indonesia does not have such benefits in my opinion.
 

centurion

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I wish the expat that described his experience with the tax authorities in Indonesia confronting him with a 18% tax bill on his Singapore bank assets wasn't real and could be brushed under the rug! But this issue needs to be watched carefully so "we" can be kept ware if it's becoming a trend. In Indonesia there has always been a disconnect between the law and implementation of it. Sometimes to our benefit, sometimes it causes problems. It seems Indonesia is now using the "Common Reporting Standard" financial system to our detriment. https://www.oecd.org/tax/automatic-exchange/common-reporting-standard/

Only a few countries in the world tax expat residents on their "world wide income". The United States is of course one of them, but people tolerate it because of the benefits associated with living there. Indonesia does not have such benefits in my opinion.
Indonesia is in the common reporting standards, but other countries do not disclose the bank holders so easily to Indonesia. I know that Singapore is not giving easy names (as I have heard, the request must contain the specific name, the bank, and the account number, cannot be a blanket request).

I had some friends being questioned about some not-so-big transactions from abroad (Jakarta).

The regulations are as they are, similar to the US system, however, the implementation is loose. The manner of the government ruling here is that the citizen (or foreigner) is always in some potential non-compliance situation, so the state can harass him/her.
 

Helpful Herbert

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Only a few countries in the world tax expat residents on their "world wide income". The United States is of course one of them, but people tolerate it because of the benefits associated with living there. Indonesia does not have such benefits in my opinion.
I think you are misunderstanding it. The USA taxes its own citizens on their income worldwide even if they no longer live in the country. That is very unusual, in fact only Eritrea does it, no other country in the world does that.

Most countries tax expat residents on their worldwide income, at least in theory. For example the UK does that (although there is an exception "non-dom" but that's only for very rich people, you need to pay a charge of £30k to take advantage of it). Double tax treaties exist to make sure you will not pay taxes twice on the same item in two countries. You can download double tax treaties from Google they are written quite clearly.

Regarding Indonesian tax, the cases I have heard of people getting additional surprise tax assessments have all been for those who already submit Indonesian tax returns every year. I have never heard it happening to someone living as a KITAP spouse or retiree who does not submit tax returns. Having said that, it is quite likely that they will increase their efforts to get everyone into the system (making the tax number the same as the ID number is one step in that direction) and then they may start tracking down those who haven't submitted tax returns. Making it a condition of KITAP renewal could be one way of doing it.
 
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IndoTom

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The USA taxes its own citizens on their income worldwide even if they no longer live in the country. That is very unusual, in fact only Eritrea does it, no other country in the world does that.
Also of note is the USA taxes foreigner permenant residents on their worldwide income as well.
 

dafluff

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Also of note is the USA taxes foreigner permenant residents on their worldwide income as well.
Pretty much every country taxes its tax residents on worldwide income. This is not at all unique to Indonesia. The difference for the US is that it continues to tax them even when they are not residents and even after they give up their citizenship.

Indonesia also has tax treaties with many countries and (mostly?) does not double tax income that has already been taxed. For the majority of expats in Indonesia, the tax bill in Indonesia will be zero after those are considered.

The problem is that for years we have been told, even by tax professionals, not to worry about foreign income, and not to worry about listing foreign assets in the annual tax report. This advice is clearly wrong when the laws in the books are considered.
 

centurion

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Indonesia also has tax treaties with many countries and (mostly?) does not double tax income that has already been taxed. For the majority of expats in Indonesia, the tax bill in Indonesia will be zero after those are considered.
.
Actually, in most double taxation treaties, Indonesia accepts the foreign paid tax only as a credit for the Indonesian tax( that is up to 35% depending on the tax bracket of the taxpayer). Tax on pensions in DTT with Indonesia are treated slightly differently depending on the countries concerned (ie. government pensions are not taxed, private pensions are, minus the tax credit if some tax is already paid and so on).
 

R Cameron

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The difference for the US is that it continues to tax them even when they are not residents and even after they give up their citizenship.
You sure about that (bolded) part? Do you have a source?
 

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