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Personal income tax for allowance payable or not?

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  • Personal income tax for allowance payable or not?

    Hi Everyone,

    Good morning!

    I am a foreigner and is currently considering to move to Indonesia as I received an offer from a local company.

    I heard that the Indonesia income tax is quite high as I am currently working in Singapore with quite low-income tax.

    My employer had told me that "Based on Indonesia policy, we have to break down salary number into Basic Salary 75% & Allowance 25%."

    May I check here
    1).which clause does this policy come from as I had searched online but cannot find anything yet.

    2). Should I pay the personal income tax for the "position allowance " (25% of the salary )? I had read some tax book from KPMG/EY but they only mentioned "taxable income" while I still can not find the definition of taxable income.

    Apart from this, how about housing allowance, meal allowance or clothes allowance?

    I am sorry if I do not say my questions clearly but any ideas or tips are highly appreciated.

    Thanks!
    Mz

  • #2
    Originally posted by idcnidcnidcn View Post
    ... "Based on Indonesia policy, we have to break down salary number into Basic Salary 75% & Allowance 25%." ...

    1).which clause does this policy come from ...

    2). Should I pay the personal income tax for the "position allowance " (25% of the salary )? ...

    3) ... I still can not find the definition of taxable income.

    4) ... how about housing allowance, meal allowance or clothes allowance? ...

    1) I did read the Income Tax Law but I didn't see that there . To me , it seems wrong .

    2) Yes , in my view .

    3) According to Article 4 of the Income Tax Law :
    "(1) Taxable Object is income, which is defined as any increase in economics capacity received by or accrued by a Taxpayer from Indonesia as well as from offshore, which may be utilized for consumption or increasing the taxpayer’s wealth, in whatever name and form ..." .

    4) In my view , all taxable , except maybe : unusual/non-normal/special work cloths .

    Note : I am not a tax specialist but did my own Tax Return reports for 17 years in my country and did read parts of the Indonesian Income Tax Law .



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


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

    http://www.expat.or.id/info/individualincometaxes.html (About income tax)

    http://www.pajak.go.id/eng/ (Indonesian Government Tax Office)

    http://www.pwc.com/id/en/indonesian-...-Book_2012.pdf (PWC tax guide)

    http://www.deloitte.com/assets/Dcom-...sia%202013.pdf (Deloitte tax guide)

    http://www.pkf.com/publications/tax-...tax-guide-2012 (PKF tax guide)

    Comment


    • #3
      Originally posted by idcnidcnidcn View Post
      Hi Everyone,

      Good morning!

      I am a foreigner and is currently considering to move to Indonesia as I received an offer from a local company.

      I heard that the Indonesia income tax is quite high as I am currently working in Singapore with quite low-income tax.

      My employer had told me that "Based on Indonesia policy, we have to break down salary number into Basic Salary 75% & Allowance 25%."

      May I check here
      1).which clause does this policy come from as I had searched online but cannot find anything yet.

      2). Should I pay the personal income tax for the "position allowance " (25% of the salary )? I had read some tax book from KPMG/EY but they only mentioned "taxable income" while I still can not find the definition of taxable income.

      Apart from this, how about housing allowance, meal allowance or clothes allowance?

      I am sorry if I do not say my questions clearly but any ideas or tips are highly appreciated.

      Thanks!
      Mz
      If you still need a suggest for tax... you can contact me at 081289977997.

      Comment

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