Taxation and Family Visa (Kitas)

Thierry

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Joined
Feb 1, 2023
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2
Hi Indo Expats,
I am currently on a B211 visa with my wife and children (all Indonesian citizens) in Indonesia. I plan to stay on the B211 for a couple of months but may then change it into a family visa. I have tried to find out about the tax implications of that. I will receive income from a company abroad with no ongoing business in Indonesia (freelancing). I also have some capital income from stock investment (not Indonesian companies/investment).
My aim is not to evade taxes, I am willing to pay my share as a country's resident, however, I have no idea at all which parts of my income (remote work income, capital income) would be subject to taxes if I am residing in Indonesia on a family visa. I have checked the threads in this forum on the subject, but did not find conclusive answers for my specific case. I would appreciate if someone knowledgeable on the subject could let me know his/her point of view and/or point me to a source or company who may provide me with this information.
Thierry
 
If you (intend) to stay in the country for more than 183 days per year you are taxable. And that’s on worldwide income so you have to report that. Obviously there can be tax treaties between Indonesia and the country where the income is generated.

So that’s on the income part. But, as you probably already figured out, the Indonesian system does not really recognize your situation.

In fact they only recognize ‘foreign workers’ (TKA), who are foreign nationals that have work visas in the Indonesian territory. You and many others don’t comply, you’re sponsored by your wife and don’t have a contract with an Indonesian company. And in fact, one can’t work in Indonesia for a foreign company (there are business visa etc. which are very limited in scope).

Besides the digital nomads which you see in Canggu‘s coffee shops there’s something else; western companies have their people work in assignments from villas in Bali, in a kind of work-staycation solution. They even advertise that and call it a perk. Ministry of Manpower, Tax authorities etc. are not doing anything about that so it makes you wonder how important that is in the local perception.

And last but not least, often they are not willing to provide a foreigner with a tax ID number (NPWP) if the person does not work in Indonesia (for an Indonesian company).

So then, for many years -even decades- already, we end up in this forum in semi-philosophical discussions about a high level law (UU) that states that everyone is allowed to work to provide for their families. And we’re waiting for the first law suit challenging that.

I don’t want to advocate anything illegal but if I had a (freelance) job working ad-hoc online for foreign companies and if I would be paid on foreign bank accounts, I don’t think I would open this can of worms.
 
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I would go into the nearest tax office and try once and gently to make an NPWP, it's likely they will not give it to you on a B211 visa. Then I would try again (once and gently) when you get KITAS. And once more when you get KTP (shortly after you get KITAP). Supposedly the KTP will become the NPWP soon, but we can wait and see how that develops.

As long as you show a little effort, the ball is in their court and you can feel safe (in my opinion, no guarantee expressed or implied).
 
The key point is that they will not give you an NPWP in your position, so there is no mechanism for you to pay tax even if you wanted to. You need an Indonesian employer to get an NPWP.
 
Lot of messages about quietly not pushing the tax issue but at the same time isnt OP not allowed to work on a family visa and wouldnt the foreign company also be in danger of establishing a Permanent Establishment in country by having a worker here?

I get it that the laws are outdated so everyone is tiptoeing around them, but legally isnt that still the case?
 
Npwp not for 211
Only kitas imta
Why would someone on a 211 be paying tax? You not supposed to be working
So definitely I would not be asking for one or they might start asking questions and visiting you and asking your neighbours where you go in a suit every day at 8a.m
 
Lot of messages about quietly not pushing the tax issue but at the same time isnt OP not allowed to work on a family visa and wouldnt the foreign company also be in danger of establishing a Permanent Establishment in country by having a worker here?

I get it that the laws are outdated so everyone is tiptoeing around them, but legally isnt that still the case?
The relevant double tax agreement sets out the permanent establishment rules (article 5 I think). Indonesian PE rules are not that strict but if the foreign employer is concerned about it, then they could ask a local tax consultant to give them an opinion.
 
Thanks All for those inputs, that is lots of food for thought. I still have a couple of months to mull over it...will post here in case I really switch to the kitas.
 
If you (intend) to stay in the country for more than 183 days per year you are taxable. And that’s on worldwide income so you have to report that. Obviously there can be tax treaties between Indonesia and the country where the income is generated.

So that’s on the income part. But, as you probably already figured out, the Indonesian system does not really recognize your situation.

In fact they only recognize ‘foreign workers’ (TKA), who are foreign nationals that have work visas in the Indonesian territory. You and many others don’t comply, you’re sponsored by your wife and don’t have a contract with an Indonesian company. And in fact, one can’t work in Indonesia for a foreign company (there are business visa etc. which are very limited in scope).

Besides the digital nomads which you see in Canggu‘s coffee shops there’s something else; western companies have their people work in assignments from villas in Bali, in a kind of work-staycation solution. They even advertise that and call it a perk. Ministry of Manpower, Tax authorities etc. are not doing anything about that so it makes you wonder how important that is in the local perception.

And last but not least, often they are not willing to provide a foreigner with a tax ID number (NPWP) if the person does not work in Indonesia (for an Indonesian company).

So then, for many years -even decades- already, we end up in this forum in semi-philosophical discussions about a high level law (UU) that states that everyone is allowed to work to provide for their families. And we’re waiting for the first law suit challenging that.

I don’t want to advocate anything illegal but if I had a (freelance) job working ad-hoc online for foreign companies and if I would be paid on foreign bank accounts, I don’t think I would open this can of worms.
The best stated advice I have seen about this topic!
 

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