Personal Income Tax for Expat Workers in Indonesia

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Not all expats come to Indonesia for a holiday. There are also many of them coming to Indonesia to work. If you consider yourself an individual who works in Indonesia without being a resident, you’re liable to pay personal income tax (PIT) for the income you earn in Indonesia. That’s why it’s very important for you as an expat worker to understand your tax liability in Indonesia. Here’s everything you need to know!

Are all expats eligible to pay personal income tax in Indonesia?

You will be deemed as a resident taxpayer on a total of more than 183 days in 12 months from the date of arrival to the date of your final departure. As a resident taxpayer, at the end of each fiscal year, you are required to report your assets and liabilities. The terms of any financial agreement between your home country and Indonesia are necessary to be reviewed because that could have implications for your requirements.

You may have to pay 2% of the monthly interest rate for the amount you owe if you fail to pay your temporary payment in Indonesia. And if you fail to file your returns on time, you may need to pay the fine on late filing and may even be deemed a criminal act under certain conditions.

What is the scope of taxable income in Indonesia?

The revenue from your job is taxable in Indonesia regardless of where you are paid. The taxable income covers, in addition to your monthly salary, incentives, fees and any deductions such as lodging, education and medical care.

You must, as a resident taxpayer, register at the Indonesian tax office and receive an ID of the government, also referred to as aTax Identification Number (NPWP); and, when you leave Indonesia, you must also “unregister” this ID number. The extra 20% in addition to regular income tax rates can be charged for those expats without NPWP.

How about the tax rates?

As a citizen taxpayer, the taxable income is subject to the following rates:

  • 5% – IDR1 – 25 million
  • 10% – IDR25 – 50 million
  • 15% – IDR50 – 100 million
  • 25% – IDR100 – 200 million
  • 30% – Over IDR200 million

An individual is deducted from IDR2,8 million, wife IDR2.8 million, and up to three children IDR1.4 million. The Positions Expense is a deduction of a total of 5% or a maximum of IDR1.2 million from the gross revenues.

Tax filing obligations in Indonesia

There are some crucial dates in Indonesia that you should keep in mind. Any provisional monthly tax due before the 15th of each month of your following month should be charged for the Indonesian fiscal year from 1 January to 31 December. For example, the September 2018 tax installment should be paid by October 15, 2018.

Every year by 31 March, you are required to pay and file your annual income tax return. Therefore, the 2018 fiscal year Individual Income Tax Return should be filed by March 31, 2019. A filing extension may be requested if necessary, and if approved and issued by the tax office, this will provide a total two-month extension. Nevertheless, you can not apply for the actual tax payment date to be extended.

 

However, your tax obligation will be canceled if you leave Indonesia. To do so, you’re required to apply to the local tax office. But if you stay in Indonesia and fail to pay personal income tax, the punishment will range from fines to imprisonment. So, make sure to oblige the rule!

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