Expatriate taxation part I. (Income tax)

Expatriates working and living in Indonesia might be wondering about their self regarding the taxation Indonesia  do they have to  participate?. How  to participate in the taxation  program if they are obligate to?

According to the  laws

Be present more than 183 days during one year in Indonesia –

knowing this 12 month period is not necessarily the calendar year. Indeed, anyone who has spent that length of time in the country, regardless of the type of visa they are using to visit the country, will be considered as a tax resident in Indonesia

Reside in Indonesia and intend to remain

there – a foreign individual working in Indonesia might be considered as a resident even though they have spent less than 183 days in the country. For instance this would be the case if he moved with his family to Indonesia and that it was clear enough that he intended to stay in Indonesia for a reasonable length of time.

Thus, the key criteria to determine whether or not an individual must be considered as a Indonesian tax resident isn’t nationality, but rather length of stay (or intended stay).

An expatriate will be considered as a tax resident in Indonesia until the date of final departure from the country.

In Indonesia, according to article 4 of chapter 3 of the Personal Income tax in its updated version of 2008, taxable income includes:

1.       Employment income

2.       Income from the exercise of an independent profession or business

3.       Passive income (dividends, royalties, interest, insurance gains)

4.       Capital gains (from the sale or transfer of property)

5.       Rents and other income from the use of property

6.       For the purposes of this article however, we will offer a focus on taxation of employment income.

The  below tables listed the income of expatriate which included  as the tax payer  

Band	Annual Income	Rate
Tax Free	Up to Rp54,000,000	0%
Band I	Up to Rp50,000,000	5%
Band II	Rp50,000,000 to Rp250,000,000	15%
Band III	Rp250,000,000 to Rp500,000,000	25%
Band IV	Above Rp500,000,000	30%