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2014-12-09 11:09:47

Do you have to pay tax in Indonesia? What are the different taxes in Indonesia? Find the answers to your queries about taxation in this article.

From the date of your arrival until the date of your final departure, you will be considered a resident taxpayer if you stay in Indonesia for more than 183 days in any 12-month period. Read this article to find out more about your tax obligations while working in Indonesia.

As a resident taxpayer, you will be required to declare your assets and liabilities at the end of each fiscal year. It is important to keep updated as to the terms of any tax treaty that exists between your home country and Indonesia, as this may have implications as to your requirements. You can be issued with a certificate of domicile if you need proof of your residential status to claim any benefits under Double Taxation Agreements (DTA).

If you don't pay your tax on time in Indonesia, then you may be subject to a 2% monthly interest charge on the amount you owe. And if you don't file your returns on time, then you may need to pay a fine for late filing and, under some circumstances, it can even be considered a criminal act that warrants imprisonment.

 Good to know:

As an expat, in addition to tax, you will be required to pay contributions for social security schemes, such as the country's manpower scheme (BPJS Ketenagakerjaan) and the healthcare scheme (BPJS Kesehatan), which are mandatory for both Indonesian nationals and foreigners who work in Indonesia for at least half the year. When renewing your work permit, you will need to be able to prove your participation in these social security schemes.

If you are ever unsure as to any details regarding your obligations while in Indonesia, don't hesitate to speak to a specialist or seek advice from your employer. However, note that paying tax in a timely manner is considered your responsibility as a foreigner residing in the country.

Tax obligations

In Indonesia, your employment income is subject to tax, irrelevant of where you are paid. In addition to your monthly salary, this taxable income includes bonuses, commissions, and any allowances, such as housing, education, and medical care.

As a resident taxpayer, you are required to register with the Indonesian tax office and obtain a tax ID number, known as an NPWP; and you must likewise “de-register” this tax ID number if you leave Indonesia for good. Those without an NPWP can be subject to a surcharge of 20% on top of the basic income tax rates.

While living in the country, you can expect to be taxed on your worldwide income, regardless of the source, so you will need to file an individual income tax return that annually declares your global income, assets, and liabilities. You should keep all documents for a minimum period of 10 years that show your income, taxes paid, assets, and liabilities declared on the individual tax return. These can include bank statements, foreign tax returns, and ownership certificates.

 Important:

Your annual tax return applies to the period from 1st January to 31st December and should be lodged at the tax office where you are registered by 31st March of the following year at the latest. The tax office now encourages taxpayers to use the electronic filing system to improve their administration system and avoid long queues, and you should be sure to pay any tax underpayments before you lodge your tax return.

Tax rates and personal deductions

As a resident taxpayer, you will be subject to the following rates on your taxable income:

  • 5% - Up to IDR50,000,000
  • 15% - From IDR50,000,000 to IDR250,000,000
  • 25% - From IDR250,000,000 to IDR500,000,000
  • 30% - Over IDR500,000,000

However, it's worth noting when calculating your taxable income that you will qualify for certain deductions. These will depend on your personal circumstances and include spouse or dependent support, contributions to an approved pension fund, and compulsory religious contributions, such as zakat.

Important dates

When it comes to paying tax in Indonesia, there are some important dates you should keep in mind. The Indonesian fiscal year runs from 1st January to 31st December, and you should settle any provisional monthly tax that is due by the 15th of each following month. For example, the tax installment for September 2017 should be paid by 15th October 2017.

You are required to pay and file your annual individual income tax return by 31st March each year. So, your Individual Income Tax Return for the 2017 fiscal year should be filed by 31st March 2018. A filing extension can be requested if need be, and this will provide a maximum two-month extension if approved and granted by the tax office. However, you cannot request an extension of the actual tax payment deadline.

 Useful links:

Indonesia Individual Income Tax Guide 2017

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