Home » Indonesia » Taxation » Employment Taxation for Expats in Indonesia

Employment Taxation for Expats in Indonesia

Submitted: October 2014

Residence

Generally you will be considered tax resident in Indonesia if you stay in the country for more than 183 days during any 12 month period. However you may be considered resident even though you have spent less than 183 days in the country. This would be the case if you disposed of your home in another country, moved with your family to Indonesia and took up employment and it was clear you intended to stay in the country for a reasonable length of time.

It is important to be aware of the terms of any tax treaty that exists between Indonesia and your home country as this may well dictate how you are treated with respect to residency and tax.

As a resident, you will be taxable on your worldwide income and gains. If you remain non-resident you will only be taxed on Indonesian source income. A resident need not pay Indonesian tax on foreign source income if they work abroad for longer than 183 days in any 12 month period, and pay foreign tax on their earnings.

 

Tax Rates

The tax year runs from 1 January to 31 December. As a resident, your Indonesian employer will withhold tax from your wages or salary on a monthly basis. These deductions will be set against your overall tax liability when you fill in your tax return. The amount your employer deducts will be calculated monthly, based on the progressive rates in the table below.

For any other income that you earn on a regular basis, you must make monthly provisional tax payments to the tax department based on the income earned in the previous year. Other irregular forms of income are dealt with by your final tax return for the year.

Generally you will be able to offset income tax paid abroad on foreign employment earnings. You will also be able to offset withholding taxes paid abroad on other forms of income. If you are a non-resident, you will be subject to a final withholding tax at a rate of 20% on employment income from Indonesian sources, which will be deducted by your employer. 

The following table shows the 2014 progressive tax rates on taxable income in Indonesia:

Income (Rp) Rate
Up to 50 million 5%
50 million - 250 million 15%
250 million - 500 million 25%
500 million and over 30%

 

Monthly tax returns must be made by the 20th day of the following month; provisional payments must be made by the 15th day of the following month. Tax returns for the year must be filed by 31 March of the following tax year, and payment of any outstanding tax must have been made before that date. The filing deadline can be extended to 31 May using Form 1770-Y; however you still need to have paid all outstanding before 31 March. There is a Rp100,000 penalty for late filing of both monthly and annual returns. Late payment of tax attracts an interest rate of 2% of the tax due per month.

If you overestimate the tax due, and pay too much tax in your monthly instalments, be aware that you will not be able to receive a rebate after the filing of the annual tax return until your case has been audited. This will not only cause delay, but may also cause problems if there are any minor differences in interpretation of tax rules between you and the tax department.

 

 

 



Moving to Indonesia

If you are considering moving to Indonesia or are soon to depart, you can find helpful information and advice in the Expat Briefing dedicated Indonesian section including; details of immigration and visas, Indonesian forums, Indonesian event listings and service providers in Indonesia.

picture1

Living in Indonesia

From your safety to shoppingliving in Indonesia can yield great benefits as well as occasional drawbacks.  Find your feet and stay abreast of the latest developments affecting expats in Indonesia with relevant news and up-to-date information.

picture1

Working in Indonesia

Working in Indonesia can be rewarding as well as stressful, if you don't plan ahead and fulfill any legal requirements. Find out about visas and passports, owning and operating a company in Indonesia, and general Indonesian culture of the labour market.

picture1

 

Indonesian Expat News Headlines

Indonesian Expat Service Providers


Indonesian Expat Tools