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  • Retirement visa and income tax

    I would like to hear the experience of other retired visa holders with taxation.


    Our case is as follows.
    We - Dutch citizens - have lived in Java happily for almost six years now on a visa lansia KITAS and are ready to apply for a KITAP. Never bothered about taxes in the belief that - when the dinas pajak found us out - the treaty to prevent double taxation with our country (the Netherlands) would set us free.
    Not so, we discovered after obtaining a NPWP and the tax filing forms. The treaty only states that income tax paid in the Netherlands will be deducted from the tax (PPh) due in Indonesia. And as the amount due in Indonesia is much higher than that in the Netherlands, the balance to be paid comes as a surprise.
    How can that be, as the top rate in the Netherlands (52%) is higher than the top rate in Indonesia (35%)? Well, as wages in Indonesia are much lower than in the Netherlands, the top rate cuts in at a very much lower level. In fact in the Netherlands we do'nt reach the top level. Here everything above Rp 200,000,000 is taxed at 35%.


    We are now reconsidering our intention to stay here indefinitely.
    I have downloaded the treaties of the Netherlands with Indonesia, Malaysia, Vietnam and Thailand (the Dutch Treasury posts them in the internet). Malaysia and Vietnam do the same as Indonesia, only in Thailand we would not have to pay again on a pension already taxed in the Netherlands.

  • #2
    Theo1006

    I suggest you read the Make Malaysia your 2nd Home (MM2H) tax treaty from Malaysia.
    I have recently become an MM2H visa holder and can advise that Malaysia does not apply tax on any income derived offshore Malaysia.
    That is one of the main reasons expats apply for it.
    This means that pensions and income may be taxed in the source country but not again in Malaysia. Only income actually generated in Malaysia is liable for taxation, and that is minimal.

    Malaysia also offers a tax free car to all new MM2H residents, with some restrictions, and any furnishings etc. shipped from abroad, are free of tax.

    The MM2H visa lasts for 10 years and recently some holders are renewing for a 2nd 10 years with no restrictions. In special circumstances MM2H residents may work and own businesses. All can own property although a recent law limits the purchase to those properties costing more than MR 500,000 (US$150,000) but this rule is still contentious and could be amended.

    David

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    • #3
      Theo , I believe you are applying the Indonesian income law correctly , but I would suggest you to talk to the officers at the Kantor Pajak . I already talked to more than 3 different officers and they said not to worry about income outside Indonesia if you don't have any Indonesian income ( other than the interest in banks ) . The question is if they could put this in writing or it is an internal procedure approved by the local boss , because it seems the law don't differentiate us (not having Indo income) from the others working here . I , myself , didn't go further in that because my income is all described as "final taxed" which has different treatment .
      Another question to your country's officer may be : do the Netherlands send all your data to Indonesia easily or only when there is a judicial request ? You know , recently the Indonesian Tax Office published a list of big companies owing big money in tax , even so the government is not suing them yet . In my country I was a public servant and we all had to use our time wisely as we were not many , dealing with the bigger problem first . I would never go after people like you .
      Last edited by marcus; 29-03-10, 11:07.

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      • #4
        Originally posted by marcus View Post
        Theo , I believe you are applying the Indonesian income law correctly , but I would suggest you to talk to the officers at the Kantor Pajak . I already talked to more than 3 different officers and they said not to worry about income outside Indonesia if you don't have any Indonesian income ( other than the interest in banks ) . The question is if they could put this in writing or it is an internal procedure approved by the local boss , because it seems the law don't differentiate us (not having Indo income) from the others working here . I , myself , didn't go further in that because my income is all described as "final taxed" and have different treatment .
        Another question to your country's officer may be : do the Netherlands send all your data to Indonesia easily or only when there is a judicial request ?
        Marcus...you seem to be the one willing to share knowledge on RI taxes. Thank you for that.

        When I interviewed an Agent ref: Retirement Visa....I asked, "How does one apply for the NPWP and how should it be completed." His answer was that none of his clients filled in NWPW as they were not allowed to be employed..I then asked about income produced offshore from pensions and investments...he didn't have a clue other than to say...no-one checks! (IMO there is a great difference between Salaries and Income and in most jurisdictions these are separately reviewed.)

        My next question was how does one exit/re-enter without an NPWP...he said his clients pay fiskal.

        I did not employ this Agent as it sounds as if he takes my Rp 15,000,000 and spreads it largesse around the Immigration Dept. to get papers signed, which are probably not legal as they may compromise an existing law...as Atlantis inferred in another thread.

        David

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        • #5
          I think a lot of the confusion is from the definition of Income. Last year, I filed for the NPWP for the first time. My income from the States is simply from Social Security and taxable retirement accounts with associated interest, dividends and capital gains. I printed out monthly statements of my bank account showing most increases were from these accounts only. The retirement account distributions are partially taxable in the States as income. The tax office simple looked at these statements and handed them back. All they wanted was a signed letter stating I had no income.

          My wife and I got the temporary NPWP that was accepted at the fiskal counter at the airport and later the permanent card.

          This year, basically the same. A letter certifying no income.

          My only concern is the NPWP has no expiration date meaning a new one isn't given each year, so its validity depends on the proper data base being updated properly.

          Comment


          • #6
            Originally posted by Kimdub View Post
            I think a lot of the confusion is from the definition of Income. Last year, I filed for the NPWP for the first time. My income from the States is simply from Social Security and taxable retirement accounts with associated interest, dividends and capital gains. I printed out monthly statements of my bank account showing most increases were from these accounts only. The retirement account distributions are partially taxable in the States as income. The tax office simple looked at these statements and handed them back. All they wanted was a signed letter stating I had no income.

            My wife and I got the temporary NPWP that was accepted at the fiskal counter at the airport and later the permanent card.

            This year, basically the same. A letter certifying no income.

            My only concern is the NPWP has no expiration date meaning a new one isn't given each year, so its validity depends on the proper data base being updated properly.
            That's good information Kimdub...can you confirm this 'letter certifying no income' is signed by whom...yourself... or some one with a stamp?

            Ii agree with your statement of confusion on the word 'income.'
            In Hong Kong, for example, it is called salary tax as distinct from income tax.

            It would be very hard for anyone to survive on no income...but is all income taxed in RI is the question that confuses me. I have heard that world-wide income is taxable but I don't know enough about RI tax laws and find it scary to submit to that.

            David

            Comment


            • #7
              Originally posted by Davita View Post
              Theo1006
              (Malaysia) All can own property although a recent law limits the purchase to those properties costing more than MR 500,000 (US$150,000) but this rule is still contentious and could be amended.
              David
              The limit has been RM 250,000 since ages, even long time ago when you had to get a government approval to being a foreign investor to buy property. Malaysia is very easy for retirement, no even need to apply for MM2H if you only want to spend winters there, as most western nationals will get 3 or 6 month visa on arrival. No worries about taxation, as only income generated in Malaysia is taxed.

              Found this about supposedly current limits in the state of Johor (they may vary from state to state and KL is its own special federal territory):

              Buying direct from the property developer
              (Foreigners only allowed to purchase the following properties)
              2 storey terrace house and above – RM 250,000 and above
              2 storey semi-detached and above – RM 250,000 and above
              2 storey bungalow or empty lot for bungalow – RM 250,000 and above
              Apartment/ Condominium – RM 250,000 and above
              Holiday home – RM 250,000 and above

              Buying from an individual or company
              (Foreigners only allowed to purchase the following properties)
              2 storey bungalow/ hoilday home – RM 500,000 and above
              2 storey semi0detached and above – RM 350,000 and above
              Apartment/ Condominium – RM 350,000 and above

              EDIT: I should be ashamed, I live (still) in Malaysia but the Jan 1 2010 ruling about RM 500,000 limit has escaped my eyes... However, state of Selangor has decided to suspend the ruling, and a similar motion is in progress in Penang. Frankly, RM 500,000 is very very high for Malaysia and makes purchasing property very unattractive unless for luxury condo or a large house on a large plot of land.
              Last edited by Bule Kere Gembel; 30-03-10, 13:08.

              Comment


              • #8
                Originally posted by Davita View Post
                That's good information Kimdub...can you confirm this 'letter certifying no income' is signed by whom...yourself... or some one with a stamp?

                Ii agree with your statement of confusion on the word 'income.'
                In Hong Kong, for example, it is called salary tax as distinct from income tax.

                It would be very hard for anyone to survive on no income...but is all income taxed in RI is the question that confuses me. I have heard that world-wide income is taxable but I don't know enough about RI tax laws and find it scary to submit to that.

                David
                Sorry I can't give you the correct terminologies, but the letter we sign required the signature over a little stamp that was purchased at the local store for not many Rupiah. Both my wife and I signed the letter. And the process really was easy after getting over the anxiety of what would be required and how deeply they would investigate.

                As far as world wide income, I guess it is up to the individual, but I can't imagine any method the locals would have to check that. For us, we didn't have to worry as we are living only on retirement income that was fully explained to the tax people and was quickly accepted as non taxable here. During both visits to the tax office we were asked a couple of times if we had any employment in Indonesia. They didn't even seem concerned about farm income, but more on salaries from employment.

                Comment


                • #9
                  Originally posted by Davita View Post
                  Theo1006

                  I suggest you read the Make Malaysia your 2nd Home (MM2H) tax treaty from Malaysia.
                  I have recently become an MM2H visa holder and can advise that Malaysia does not apply tax on any income derived offshore Malaysia.

                  David
                  Thanks, David, for the info. Why is Malaysia always a step (or several steps) ahead of Indonesia? It is good to know we have more options.

                  Theo

                  Comment


                  • #10
                    Originally posted by Davita View Post
                    That's good information Kimdub...can you confirm this 'letter certifying no income' is signed by whom...yourself... or some one with a stamp?... I have heard that world-wide income is taxable but I don't know enough about RI tax laws and find it scary to submit to that. David
                    I also wrote this kind of letter , suggested by one tax officer . It is a "Surat Pernyataan" (Statement) which I signed myself ( as a single person) without stamp . From what I understand , the letter is to make the annual tax return report more easily understood by the officers when they see it with almost nothing in there (the report is about 7 sheets long) . I also was very afraid to get the NPWP , but after talking to about 5 different tax officers , my feeling is that they are not concerned about people who don't work/ have a business in Indonesia . The first I asked , told me that clearly , in English .
                    Last edited by marcus; 09-04-10, 15:44.

                    Comment


                    • #11
                      Hi does anyone know how to file income tax in Bali ? Where to go ext ext .I have a retirement visa and do not make money here. In the usa I have no pension .For the past 6 years I have been living off saving. I do not want to pay taxes when I am not making any money. .Can anyone shed some light

                      Comment


                      • #12
                        Originally posted by john richards View Post
                        Hi does anyone know how to file income tax in Bali ? Where to go ext ext ...

                        First you need to get a Tax number , called NPWP . Then every end of March you need to present the Annual Tax Return Report . In cases like yours , it is very easy to fill this report (officers at Kantor Pajak can give you all the information you may need or ask here any specific thing you want) .

                        But , does somebody told you to do that ? I am asking because , I already asked many Kantor Pajak (Tax Office) , and the answer I got was that it was not necessary (I am in a similar situation) . This was some 10 years ago , so you could confirm at a Kantor Pajak near you (they were very helpful to me) .

                        For more about this subject , check the link below .


                        http://www.livinginindonesiaforum.or...g-to-indonesia (retirement visa , tax) .
                        Last edited by marcus; 08-03-18, 12:46.

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