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  • Indonesian tax on US stock

    Hi all,

    I am a Dutch national but live in Indonesia on a spousal visa and am an Indonesian tax resident.
    How would capital gains and dividends from the US stock market be taxed for me in Indonesia by the Indonesian government? All documentation I can find on the subject is in related to IDX stock and not overseas stock...

  • #2
    Unfortunately neither I have experience with that nor I saw any reference about that in the last 12 years of this Forum .

    I recommend you to ask that at a few Kantor Pajak in your Indonesian city .

    What I can say is that , in this Forum up to now I didn't see any member who did pay tax on worldwide income when being Indonesian tax resident (although I know the Indonesian Law requires and because of that there were a few members who asked about) . Also from this Forum , what we got from many Kantor Pajak is that we don't need to declare any income from abroad if we don't work in Indonesia (I myself got this information from 3 different Kantor Pajak but around 10 years ago , so you better ask if they still say the same now) .

    See below some rules involved in case you do have to declare those incomes to the Indonesian Kantor Pajak (I don't know the rules about income from stocks) . Be informed that Indonesia doesn't apply double taxation , meaning that what you have paid in US is used as credit for what you are required to pay in Indonesia .

    Note : Please be informed that I am not a tax specialist , although I do all my tax reports myself but under my country's rule - not USA neither Indonesia) .


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


    From https://www.thejakartapost.com/news/...ostviewed&pg=/ (Nov 2019)

    [Indonesian Finance Minister Sri Mulyani Indrawati on Thursday shared the government's planned tax reforms, which includes relaxing income tax for Indonesian and foreign expatriates ...

    The planned reforms would change the Indonesian tax regime into a territorial tax system, so foreign residents and overseas Indonesians would no longer be taxed on income earned outside the country's borders.

    Foreigners who work in Indonesia for more than 183 days will be taxed on only the income they earn in Indonesia, while Indonesians who work abroad will be exempt from paying income tax in Indonesia.

    "We will revise [the regulation] that expatriates need to pay tax on their incomes [earned both] in Indonesia and abroad," Sri Mulyani told ... ]


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


    USA TAX CONVENTION WITH THE REPUBLIC OF INDONESIA
    ......
    ARTICLE 11 - Dividends
    (1) Dividends derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States.
    (2) However, if the beneficial owner of the dividends is a resident of the other Contracting State, the tax charged by the first-mentioned State may not exceed 15 percent of the gross amount of the dividends actually distributed.
    (3) Paragraph (2) shall not apply if the recipient of the dividends, being a resident of one of the Contracting States, has a permanent establishment or fixed base in the other Contracting State and the shares with respect to which the dividends are paid are effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.
    (4) Where a company which is a resident of a Contracting State has a permanent establishment in the other Contracting State, that other State may impose an additional tax in accordance with its law on the profits attributable to the permanent establishment (after deducting therefrom the company tax and other taxes on income imposed thereon in that other State) and on interest payments allocable to the permanent establishment, but the additional tax so charged shall not exceed 15 percent.
    (5) The rate of tax referred to in paragraph (4) of this Article shall not affect the rate of any such additional tax contained in any production sharing contracts and contracts of work (or any other similar contracts) relating to oil and gas or other mineral products negotiated by the Government of Indonesia, its instrumentality, its relevant State oil company or any other entity thereof with a person who is a resident of the United States.
    ..................

    ARTICLE 24 - Non-discrimination
    (1) A citizen of one of the Contracting States who is a resident of the other Contracting State shall not be subjected in that other Contracting State to more burdensome taxes or connected requirements than a citizen of that other Contracting State who is a resident therefore under the same conditions or circumstances.


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


    Indonesian Law no. 36 of 2008 (Income Tax Law)
    ......
    Article 4
    (1) Taxable Object is income, which is defined as any increase in economics capacity received by or accrued by aTaxpayer from Indonesia as well as from offshore, ... and includes :
    ...
    g. dividends, in whatever name and form ...
    Last edited by marcus; 4 weeks ago.

    Comment


    • #3
      Hi Marcus, thanks for your reply.

      I am indeed aware of the omnibus tax bill. I am certainly hoping that they consider foreign capital gains as income if you are a foreigner but local tax resident (I've vaguely heard this somewhere) and thus it would not be taxed anymore here after the bill passes.
      And a little sidenote, I don't pay taxes in the US as I am not a citizen or resident there. Just a Dutch guy in Indonesia looking to trade on the US markets.

      Comment


      • #4
        Originally posted by Bananito View Post
        ... All documentation I can find on the subject is in related to IDX stock and not overseas stock...

        I now also checked the www.idx.co.id/en-us/investor/taxation/ .

        If you do have to pay Indonesian taxes over your stocks transaction/dividends received in USA , I guess it would be like this :

        1) You check how much did you already pay in taxes over those transactions/dividends (you said you did not pay anything in USA , but did you pay in the Netherlands ?)

        2) If you paid tax in your country , lets say X Rupiah , this will be used as credit in Indonesia

        3) You need to calculate how much taxes you would pay if your stocks transactions/dividends occurred in the Indonesia (0.1% over the value of all stocks that you sold + 10% over the value of the dividends that you received) . So if this calculation result in Y Rupiah , you would have to pay (Y - X) Rupiah to the Indonesian Kantor Pajak (of course if X is bigger than Y then you pay nothing to Indonesia) .


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


        From https://www.ortax.org/ortax/?mod=tre...isi=1&type=doc

        CONSOLIDATED TRANSCRIPT OF INDONESIA - NETHERLANDS TAX TREATY
        ...............
        Article 9 - DIVIDENDS
        Dividends paid by a company which is a resident of one of the two States to a resident of the other State may be taxed in that other State.

        However, such dividends may also be taxed in the State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other State, the tax so charged shall not exceed:
        (a) 10% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends;
        (b) 15% of the gross amount of the dividends in all other cases.
        ..............

        Article 23 - NON-DISCRIMINATION
        Nationals of one of the two States shall not be subjected in the other State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the two States.


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


        Important to notice that Indonesia charges tax over the value of the stocks that you sell , it is not a tax over the profit . So even if you have a loss , you still have to pay Indonesian "income" tax .
        Last edited by marcus; 4 weeks ago.

        Comment


        • #5
          Hi Bananito, 

          My name is riani, am 2nd grade semester of student university majoring in securities analysis specialist in the capital market also a licensed tax consultant. I'd like to share it here.
          1). If you are an Indonesian tax resident then you must have a taxpayer identification number (npwp).
          2). you must have 1 official letter from village office (kelurahan) in which your domicile located which mentioned that you did paid tax in your country for those transactions.
          3). in the tax individual form, you have to fill it clear and attached a copy of that official letter.
          4). In Indonesia, the march is the month for an individual taxpayer.

          If you have any queries, please drop the message, I'll share what you need to know.
           

          Comment


          • #6
            Originally posted by rianilist View Post
            ... 1). If you are an Indonesian tax resident then you must have a taxpayer identification number (npwp).

            2). you must have 1 official letter from village office (kelurahan) in which your domicile located which mentioned that you did paid tax in your country for those transactions ...

            1) Not necessarily . See the related part of the Explanation of the Indonesian Income Tax Law below . Besides that , some foreigners said that Kantor Pajak didn't want to issue a NPWP to foreigners not working in Indonesia .

            2) I have to say that I don't know how to do it , but your explanation doesn't look right . I would guess the foreigner needs to bring a tax payment proof from the country where he/she paid the tax to use the paid value as tax credit in Indonesia (I don't see why an Indonesian Kantor Kelurahan has anything to do with that) .


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


            PENJELASAN ATAS UNDANG-UNDANG REPUBLIK INDONESIA NOMOR 36 TAHUN 2008
            (Explanation of the Income Tax Law)

            Pasal 2 / Article 2
            ..........
            Ayat (2)
            ... Sehubungan dengan pemilikan Nomor PokokWajib Pajak (NPWP), Wajib Pajak orang pribadi yang menerima penghasilan di bawah Penghasilan Tidak Kena Pajak (PTKP) tidak wajib mendaftarkan diri untuk memperoleh NPWP. (... , an individual taxpayer who receives income below the personal exemption (PTKP) is not required to register to obtain a NPWP .)

             

            Comment


            • #7
              Originally posted by rianilist View Post
              Hi Bananito,?

              My name is riani, am 2nd grade semester of student university majoring in securities analysis specialist in the capital market also a licensed tax consultant. I'd like to share it here.
              1). If you are an Indonesian tax resident then you must have a taxpayer identification number (npwp).
              2). you must have 1 official letter from village office (kelurahan) in which your domicile located which mentioned that you did paid tax in your country for those transactions.
              3). in the tax individual form, you have to fill it clear and attached a copy of that official letter.
              4). In Indonesia, the march is the month for an individual taxpayer.

              If you have any queries, please drop the message, I'll share what you need to know.
              ?
              I don't have an NPWP because they won't give me one. Like Marcus says, I don't work here so they don't want to issue it....
              I can't show a letter that I paid for the tax somewhere else because I don't want to pay tax somewhere else, I want to pay tax in Indonesia.

              I think you didn't understand the question so let me re-phrase:
              How does the Indonesian government tax foreign capital gains and dividends (so non IDX stock) for foreigners that are tax residents in Indonesia. Note, I am not inquiring about tax exemption for tax paid elsewhere.

              Very interested in your opinion as this seems to be your field.

              Comment

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