Tax Reporting for Overseas Property & Income

dafluff

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You sure about that (bolded) part? Do you have a source?

Based on the Wiki entry below, this may no longer be true for some situations. As always consult your own professional regarding taxation issues.


The first U.S. income tax to include U.S. citizens living overseas dates to 1862, but the first law to authorize taxation of former citizens was passed over a century later, in 1966. The 1966 law created Internal Revenue Code Section 877, which allowed the U.S.-source income of former citizens to be taxed for up to 10 years following the date of their loss of citizenship. Section 877 was first amended in 1996, at a time when the issue of renunciation of U.S. citizenship for tax purposes was receiving a great deal of public attention; the same attention resulted in the passage of the Reed Amendment, which attempted to prevent former U.S. citizens who renounced citizenship to avoid taxation from obtaining visas, but which was never enforced.[11][12] The American Jobs Creation act of 2004 amended Section 877 again.[13] Under the new law, any individual who had a net worth of $2 million or an average income tax liability of $124,000 for the five previous years (adjusted annually for inflation)[14] who renounces his or her citizenship is automatically assumed to have done so for tax avoidance reasons and is subject to additional taxes. Furthermore, with certain exceptions covered expatriates who spend at least 31 days in the United States in any year during the 10-year period following expatriation were subject to US taxation as if they were U.S. citizens or resident aliens.[15]
 

Wally

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I have worked in Indonesia for many years for international donor organizations and have not been liable to Indonesian tax. But since 2018 I worked for an Indonesian company. I was not aware of the requirement to report foreign assets. The tax authorities discovered that I had investments in Singapore and invited me to take part in the latest tax amnesty - but that would mean losing 18% of my assets
After taking advice, I am making a revision of my tax reports since 2018 to include the assets in Singapore. Even with late reporting penalties, it should cost me only about a third of what the amnesty would cost. Hopefully it goes OK!
However, the high tax rates and low tax free allowances in Indonesia mean that I will pay much more tax than if I was resident in my home country. So I am planning to cancel my KITAS and my NPWP and spend more time outside Indonesia. It is a shame since I have been here for over 30 years!
Hopefully the audit to cancel my NPWP will not throw up any problems!
 

Dave70

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I have worked in Indonesia for many years for international donor organizations and have not been liable to Indonesian tax. But since 2018 I worked for an Indonesian company. I was not aware of the requirement to report foreign assets. The tax authorities discovered that I had investments in Singapore and invited me to take part in the latest tax amnesty - but that would mean losing 18% of my assets
After taking advice, I am making a revision of my tax reports since 2018 to include the assets in Singapore. Even with late reporting penalties, it should cost me only about a third of what the amnesty would cost. Hopefully it goes OK!
However, the high tax rates and low tax free allowances in Indonesia mean that I will pay much more tax than if I was resident in my home country. So I am planning to cancel my KITAS and my NPWP and spend more time outside Indonesia. It is a shame since I have been here for over 30 years!
Hopefully the audit to cancel my NPWP will not throw up any problems!

Several colleagues of mine come and go throughout many years, they just got their EPO to leave Indonesia, none of them need to have their NPWP cancelled, the office just stopped filing their tax reports after they left.
 

Wally

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I was working from 2018-2020, then changed to a retirement visa for 2021 and 2022. If I leave and cancel my KITAS, I still want to come back and visit for extended periods but not more than 183 days per year. What would be the consequence if I failed to cancel my NPWP?
 

Dave70

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I was working from 2018-2020, then changed to a retirement visa for 2021 and 2022. If I leave and cancel my KITAS, I still want to come back and visit for extended periods but not more than 183 days per year. What would be the consequence if I failed to cancel my NPWP?

I don't know the consequence but logically you are not tax resident in Indonesia anymore if you are coming back as tourist. I will not worry too much about it, and will not be surprised if your NPWP cannot be cancelled. It will just become "inactive" or "dormant", I guess.
 
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Wally

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Yes, apparently the NPWP can be 'de-activated' (dinonaktifkan) rather than canceled
 

centurion

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To cancel NPWP you would need to have EPO submitted to the tax office. If not, it will be dormant.
 

a-sha

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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).
Yes, true. I checked this, asking advice from (well known) tax consultancy firm in Holland. The specific Tax Treaty will have the answers: the country who cannot tax, will either give tax exemption, or accept the tax already paid as tax credit. Btw property (e.g. houses) are always taxed only by tax authorities in the country where property is registered.
 

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