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.
Are you an Indonesian tax resident?
According to Indonesia’s Tax Regulations, an individual is considered as a Tax Resident if one of the following conditions is fulfilled:
- Is present in Indonesia for more than 183 days during a fiscal year.
- Is in Indonesia during a fiscal year and has the intention to reside in Indonesia.
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.
Personal Income Tax Rates
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:
- 5% - Up to IDR 60.000.000,
- 15% - From IDR 60.000.000 to IDR 250.000.000,
- 25% - From IDR 250.000.000 to IDR 500.000.000,
- 30% - From IDR 500.000.000 to IDR 5.000.000.000,
- 35% - Above IDR 5.000.000.000.
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.
Personal Income Tax Declaration
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.
If you would like to know more, please book a consultation with one of our expert consultants.
WA: +62 821-9495-6032