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Tax advice for 51% time in Indonesia 49 time in US

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  • Tax advice for 51% time in Indonesia 49 time in US

    Hi,
    I'm a US citizen starting a new role for a company that will allow me to work remotely from the US 49% of the time, but would require me to work from within Indonesia 51% of the time. I have the option of being an employee paid through their Jakarta based office, or a contractor. I'm hoping someone might be able to help on how best to structure this arrangement to lower taxes and reduce tax duplication. Any advice is hugely appreciated -- as well as any references to a good US-Indonesia expat tax professional.
    Thank you,
    Joi

  • #2
    Originally posted by joidd444 View Post
    (1) ... require me to work from within Indonesia 51% of the time. I have the option of being an employee paid through their Jakarta based office, or a contractor.

    (2) I'm hoping someone might be able to help on how best to structure this arrangement to lower taxes

    (3) and reduce tax duplication ...

    (4) ... any references to a good US-Indonesia expat tax professional.

    (1) According to the Law (see below the related part) , I think it doesn't matter if you work 51% or just 1% of the time in Indonesia , to legally work in Indonesia you need to be hired by an Indonesian based company and get a Work Permit/IMTA + a work Limited Stay Visa/ITAS/KITAS (so in my view , no option to be a contractor) .

    (2) As a consequence to the (1) above , by Law , the Indonesian based company that hires you must withhold (in your behalf) your monthly Indonesian income tax to transfer to the Tax Office . So I believe that there is no legal option regarding the Indonesian tax .

    (3) Regarding the Indonesian Income Tax Law , there is no tax duplication by concept .

    (4) I don't know any .


    ---------------------------------


    UU no.13 , year 2003
    CHAPTER VIII - EMPLOYMENT OF FOREIGN WORKER
    ARTICLE 42
    (1) Every employer that employs foreign worker is under an obligation to obtain written permission (Work Permit/IMTA) from Minister.
    (2) An employer who is an individual person is prohibited from employing foreign worker.
    ....

    ---------------------------------


    UU no.36 , year 2008
    Article 21
    (1)The following persons are obliged to withhold tax on remuneration in whatever form received or accrued by individual resident Taxpayer in respect of employment, services rendered, or any other similar activities:
    a. an employer who pays salaries, wages, honoraria, allowances, and other similar remuneration in respect of an employment exercised either by permanent employees or non-permanent employees;
    ...

    ---------------------------------

    http://www.expat.or.id/info/2008-IncomeTaxSDSN.pdf (Income Tax Law & Law Explanation)

    Note : There is also a Tax Treaty between Indonesia and USA too , easily available in the internet .

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