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Does a foreigner who work in indonesia have to pay income tax in indonesia?

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  • Does a foreigner who work in indonesia have to pay income tax in indonesia?

    I am wondering if anyone can tell me if someone works in indonesia with working permit have to pay income tax or any taxes? if yes, what's the percentage? and i saw somewhere that the foreigners don't need to pay due to the IMF deal, please see below. Thanks.

    Foreigners Tax

    The Foreigner's Tax (Pajak Bangsa Asingwas collected for many years by local municipal governments to offset the cost of services provided by the city to foreigners. This tax was abolished in line with the IMF economic recovery plan in 1998.
    Last edited by Hello; 01-02-10, 21:30. Reason: additional information

  • #2
    No avoidng it unless you are out of the country for more than 183 days in one year, someone has to pay be it your employer or you, do a serach on the forum and you will find that rates.
    This will do me...

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    • #3
      Originally posted by Hello View Post
      I am wondering if anyone can tell me if someone works in indonesia with working permit have to pay income tax or any taxes?.
      Yes, a foreigner who works in Indonesia does have to pay taxes in Indonesia. I suggest that you work it out with your employer and/or your local kantor pajak.
      Originally posted by Hello View Post
      and i saw somewhere that the foreigners don't need to pay due to the IMF deal, please see below. Thanks
      The Foreigner's Tax (Pajak Bangsa Asingwas collected for many years by local municipal governments to offset the cost of services provided by the city to foreigners. This tax was abolished in line with the IMF economic recovery plan in 1998.
      You refer here to the Undang-Undang nomor 74 tahun 1958 tentang Pajak Bangsa Asing which was one of the numerous discriminative law that Indonesia has enacted in the period post independance until the birth of democracy. It was taxing "foreign" residents of Indonesia, just because they were "foreigners" or to be more exact, often just because the indonesian citizenship law denied them to be Indonesian, even if they were residing in Indonesia for a few generation already. It was just a way for the regional governments and their corrupt crownies to milk a bit more the chinese community. The real "expat" community was nothing compared to the chinese community. This shameful law has been repealed in mid 1997 with the enactment of a new law concerning regional taxes.
      Last edited by atlantis; 02-02-10, 20:51.

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      • #4
        Foreigners/Expats working in Indonesia definitely do have to pay ALL the taxes Indonesians have to pay AND THEN SOME. Extra 'taxes' include the $100pm ($1,200pa) DEPNAKER fee (purportedly a training fee for Indonesians - for which I've still to see any evidence of proper use), the various bits of official paper we have to get AND pay for, etc. We also have to pay taxes on ALL WORLDWIDE income, not just that earned in this country.

        I think that there is also still a 'foreigners' tax in E Kalimantan, the official justification for which is that "they/we can afford it". Definitely no FREE ride for foreigners over here.

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        • #5
          Originally posted by Gratilla View Post
          Foreigners/Expats working in Indonesia definitely do have to pay ALL the taxes Indonesians have to pay AND THEN SOME. Extra 'taxes' include the $100pm ($1,200pa) DEPNAKER fee (purportedly a training fee for Indonesians - for which I've still to see any evidence of proper use), the various bits of official paper we have to get AND pay for, etc. We also have to pay taxes on ALL WORLDWIDE income, not just that earned in this country.

          I think that there is also still a 'foreigners' tax in E Kalimantan, the official justification for which is that "they/we can afford it". Definitely no FREE ride for foreigners over here.
          Two comments Grat, if you allow, about your post:
          1. The DPKK (USD 1200) is to be paid by the company employing the foreigner, not by the foreigner him/herself. Reading your post, a foreigner's heartbeat may start to jump...
          2. If you have any reference about the KalTim foreigner tax, I would be very interested to get it. It does sound illegal to me and therefore it may not be a tax on the legal sense of it.

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          • #6
            Everybody working in Indonesia (including foreigners) are subjected to the Indonesian income tax . I was just reading the new income law : in terms of per year income , discounting Rp15.84 million if you are single (more if married) , your first Rp50 million are taxed 5% , your next Rp200 million are taxed 15% , next Rp250 million taxed 25% , and above all that , 30% . I think your employer has to discount the tax every month from your salary and transfer to the "Kantor Pajak" . I didn't finish reading the law , #[but I think there is a big change regarding differentiating Indonesians and foreigners . If Google translated correctly , the explanation of the law says : "Domestic taxpayer is taxed on income either received or obtained from Indonesia and from outside Indonesia , while foreign taxpayer taxed only on income derived from source of income in Indonesia"] .

            #Revision : Please read Atlantis post no. 20 correcting the Google translation . The text does not refer to foreigners as I supposed .
            The part of the law referred above (the part translated by Google) , is a differentiation from people living less than 183 days and people living more than 183 days (in any period of 12 months) . Those living more than 183 days in Indonesia in any 12 months period (Indonesians and foreigners) have also to pay tax for incomes abroad . For incomes abroad , tax to be paid is only the difference from what one would pay in Indonesia on that income abroad minus the income tax paid in the country where that income was generated .
            Last edited by marcus; 20-11-10, 20:57.

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            • #7
              as far as i got it, it depends on whether the coutry you are from has an agreement with Indonesia or not.
              In some cases you can choose yourself in what country you want to pay tax...for Holland I know you need to pay Indonesian tax.

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              • #8
                Originally posted by atlantis View Post
                Two comments Grat, if you allow, about your post:
                1. The DPKK (USD 1200) is to be paid by the company employing the foreigner, not by the foreigner him/herself. Reading your post, a foreigner's heartbeat may start to jump...
                2. If you have any reference about the KalTim foreigner tax, I would be very interested to get it. It does sound illegal to me and therefore it may not be a tax on the legal sense of it.
                You're right ... of course ... as usual.

                1) I was writing from my own perspective as both a tax-paying expat and shareholder of a PMA. So whether I'm gouged from the right pocket or gouged from the left, it's pretty much the same end result.

                2) My memory is a bit hazy as to what local levy the expats of Balikpapan were (understandably) winging about. It was a good few years ago. It may have been an extra requirement (and fee, or course) for a KTP or something similar.

                Originally posted by atlantis View Post
                Reading your post, a foreigner's heartbeat may start to jump...
                I'm told I have that effect on many of the gurlls ... still!

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                • #9
                  Hi All,

                  I would like to thank you for the information, they are really helpfull, and really appreciate it. I am wondering if anyone of you can tell me IF there is a law/rule/regulation imposed by Indonesian Government for the employer to pay certain salary/wage to the employee?

                  Comment


                  • #10
                    Originally posted by Gratilla View Post
                    It was a good few years ago. It may have been an extra requirement (and fee, or course) for a KTP or something similar.
                    It then sounds legal and normal. You certainly refer to the obligation that a foreigner staying on an Izin Tinggal Terbatas has to register to the Dinas Kependudukan dan Catatan Sipil in order to get a Surat Keterengan Tempat Tinggal issued. The fees concerning this SKTT is decided by the local (Kabupaten or Kota) government and can be stiff (up to IDR 500K is not rare). This SKTT has to be renewed annually of course for those on an ITAS. It is often wrongly called a KTP because it looks like... a KTP (the colour only changes). A KTP Orang Asing, as you surely are aware, also exists but is for foreigners who are staying on an Izin Tinggal Tetap (KITAP).
                    Generally speaking, in places where there is a small number of expats, local government tend to forget to enforce this regulation. It is the case for example in Manado, where I had to struggle to get mine issued and had to explain to the petugas how she should deal with my request! Poor girl is certainly still under the trauma...
                    In places where there is a large expat community (Batam or Balikpapan for example) and where the members of the expat community tend to leave close to each others, the local governments have understood that enforcing the law was bringing some good money. They usually just put pressure on the foreign companies to inform their foreign employees that they need to give some extra bucks.
                    Last edited by atlantis; 02-02-10, 20:05.

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                    • #11
                      Originally posted by Gratilla View Post
                      ..We also have to pay taxes on ALL WORLDWIDE income, not just that earned in this country...
                      I may be wrong if Google (http://translate.google.com) didn't translate correctly , but the explanation of the new law (Pjls UU36-2008) , page 4 , which I downloaded from www.pajak.go.id , says that foreigners are taxed only on income from Indonesia . No more worries about income outside Indonesia .

                      Correction : Sorry , I was wrong . Indonesians and foreigners are treated equally according the Indonesian Income Law , and so , everybody are required to declare worldwide income if living in Indonesia for more than 183 days in any 12 months period .
                      Last edited by marcus; 08-05-10, 16:30.

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                      • #12
                        Originally posted by Hello View Post
                        Hi All,

                        I would like to thank you for the information, they are really helpfull, and really appreciate it. I am wondering if anyone of you can tell me IF there is a law/rule/regulation imposed by Indonesian Government for the employer to pay certain salary/wage to the employee?
                        There is, to my knowledge, no regulation imposing an employer to pay a certain salary to an expat employee, but there is a guideline used by the Kantor Pajak to assess if the tax declaration of a company makes sense. It lists type of function and range of salary which should be paid if I recall well. I had a couple of these guidelines but they are now outdated because they were from year 2002 or 2003 if I am not wrong.

                        Comment


                        • #13
                          Originally posted by marcus View Post
                          I may be wrong if Google (http://translate.google.com) didn't translate correctly , but the explanation of the new law (Pjls UU36-2008) , page 4 , which I downloaded from www.pajak.go.id , says that foreigners are taxed only on income from Indonesia . No more worries about income outside Indonesia .
                          Thanks Marcus...I hope you are right!

                          Hopefully someone will clarify because this is a huge difference for anyone wanting to stay in Indonesia but unwilling to be taxed on worldwide income.
                          Money not derived from the country of residence but spent there should suffice.

                          That is why Andorra, Panama, Malaysia and other Caribbean Nations have profited.

                          David

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                          • #14
                            Very informative thread.
                            Trying to pass + rep around.

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                            • #15
                              Originally posted by marcus View Post
                              I may be wrong if Google (http://translate.google.com) didn't translate correctly , but the explanation of the new law (Pjls UU36-2008) , page 4 , which I downloaded from www.pajak.go.id , says that foreigners are taxed only on income from Indonesia . No more worries about income outside Indonesia .
                              That would be great news indeed Marcus ...
                              IknowthatyoubelieveyouunderstandwhatyouthinkIsaid, butI'mnotsureyourealisethatwhatyouheardisnotwhatI meant.

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