If you live in Bali, or are engaged in any business activity here, then you may well be required to file a Personal Income Tax (PIT) declaration. It is important to understand and determine your tax residency status to ensure compliance with tax laws and regulations and to optimize your tax situation.
According to Indonesia’s Tax Regulations, an individual is considered as a Tax Resident if one of the following conditions is fulfilled:
The intention to reside refers to several variables such as: Having immigration documents such as residency permit (KITAS); work contract in Indonesia; Having tax documents such as Tax ID (NPWP); renting a place to live or moving family members to Indonesia.
As such, Indonesian Tax Residents are applied a progressive Income Tax on their worldwide annual income. It consists of a progressive rate, where only the amount covered by a range is taxed at the rate associated to it. The Indonesian Personal Income Tax Rate goes as follows:
Depending on the nature and source of the person’s income, different taxes may apply.
On the other hand, non-resident individuals are subject to a flat withholding tax (WHT) of 20% on their Indonesian-sourced income.
However, Indonesia, together with many other countries, have taken the necessary steps to prevent or at least mitigate the imposition of double taxation when living abroad. For this purpose, Indonesia has established dozens of Double Taxation Agreements (DTAs) with other countries. The tax rate depends on the country of residence and the Agreement (DTA) in place, exemptions or reductions might apply.
The recently introduced Omnibus Law also added a provision to the Income Tax Law in Indonesia, by which foreigners who have become tax residents in Indonesia, can only be taxed on their Indonesian-sourced income, when meeting certain requirements, mostly based on profession and skill and during the first 4 (four) years of their tax residency in Indonesia.
If you are a tax resident in Indonesia, you are required to declare your income, assets, and debts worldwide, and pay the corresponding taxes. The deadline for the PIT (Personal Income Tax) return is at the end of March of the following year. A penalty of IDR 100.000 is incurred for late submission.
SAS can advise and assist you with the preparation and submission of your Personal Income Tax declaration.
Please don't hesitate to consult our Tax Advisory Services with one of our expert consultants for further information regarding Tax declaration in Indonesia.
If you would like to know more, contact our expert consultants and request your consultation through our email or WhatsApp.
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