The monthly Indonesian individual tax return is due for payment and lodgment by the 15th and 20th of the following month, respectively. The annual Indonesian individual tax return should be lodged by 31 March of the following year. Any tax payable should be settled before the tax return is lodged. Spouses may choose to file jointly or separately. The law requires couples with separate Tax Identification Number to calculate the tax payable based on the combined family gross income, then report the tax payable in each tax return based on the prorated income. The obligation to withhold, remit, and report tax on cash compensation paid in connection with employment rests with the local employing entity.
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The monthly Indonesian individual tax return is due for payment and lodgment by the 15th and 20th of the following month, respectively. The annual Indonesian individual tax return should be lodged by 31 March of the following year. Any tax payable should be settled before the tax return is lodged. Spouses may choose to file jointly or separately.
The law requires couples with separate Tax Identification Number to calculate the tax payable based on the combined family gross income, then report the tax payable in each tax return based on the prorated income. The obligation to withhold, remit, and report tax on cash compensation paid in connection with employment rests with the local employing entity. Income tax withheld by employers must be remitted on a monthly basis by the 10th of the following month and reported by the 20th of the following month.
The obligation to remit and report tax on income received from non-employment sources for a calendar year such as interest, dividend, rental income, and capital gain rests with the individual. In order to file a tax return, an individual must register to obtain a tax identification number NPWP. The documents required for registration of an expatriate are:. The monthly tax payment should be settled by the 15th of the following month, and filed by 20th of the following month. For example, the January provisional tax has to be paid by 15 February , and filed by 20 February Late payment will be subject to 2 percent interest penalty per month while late filing will be sanctioned with a penalty of IDR, It should be noted that tax refunds are paid only after a full tax audit.
Therefore, care should be taken to avoid overpayment of taxes. The monthly installments should be determined based upon taxable offshore income for each month, and taking into account the income tax already paid offshore. This includes investment income such as dividends, interest, and so on, and any employment compensation received overseas. It is advisable to be conservative when calculating the estimated amount of tax to be paid since any overpayment of tax by the individual on their annual final return will be subject to an immediate tax audit.
The annual individual tax return should be filed by 31 March of the year following the end of the calendar year. If there is any amount due, the payment has to be made before the tax return is lodged. The penalty for late filing of the annual tax return is IDR, However, obtaining an extension of time to file does not provide an extension of time to pay and there is no certainty that the tax office will approve the request for an extension.
Non-residents do not have an obligation to register for an NPWP or file any individual income tax return. What are the current income tax rates for residents and non-residents in Indonesia? Generally, individuals who come to Indonesia with an intention to work and reside in Indonesia with a valid work permit and stay permit are treated as tax residents of Indonesia from the date of arrival.
An expatriate is resident until the date of final departure from Indonesia. An Indonesian national is considered a resident from birth unless they leave Indonesia permanently. An Indonesian national working overseas for more than days in a month period is also considered as non-resident.
They will only be taxed on their Indonesian-source income, provided that they have paid income tax on offshore employment earnings and has official proof of overseas residence e. An individual who is resident in Indonesia for tax purposes is required to file an individual income tax return.
In order to file a tax return, an individual must obtain a tax identification number NPWP. A twenty percent tax surcharge will be applied to the earnings of an employee who does not have an NPWP while earning income above the personal deduction threshold.
Is there, a de minimus number of days rule when it comes to residency start and end date? There is no regulation which forbids an assignee to enter Indonesia before their assignment begins, however they should already have a valid working visa before starting work in Indonesia.
Upon leaving Indonesia permanently, an expatriate must submit an application to cancel their tax registration. Therefore, the individual should ensure all tax related documents, including bank statements, foreign tax paid documents, salary slip, employment contract, and so on are readily available in anticipation of a tax audit.
The assignee may come back to Indonesia on a social or business visa; however, without a valid working visa, they are not allowed to work in Indonesia. The business visa only allows the individual to enter Indonesia for promotional or research purposes, not to exercise employment. Do the immigration authorities in Indonesia provide information to the local taxation authorities regarding when a person enters or leaves Indonesia? Yes, there have been some cases in which the tax authorities received notification from the immigration authorities regarding the arrival of expatriate assignees.
This regulation provides for the exchange of information, joint intelligence activities, collaboration within law enforcement and training in tax and immigration processes. The assignee will still have an obligation to file their final individual income tax return for the period residency in Indonesia from 1 January to the date of their permanent departure from Indonesia.
The final year tax return is due immediately after permanent departure. If no, are the taxation authorities in Indonesia considering the adoption of this interpretation of economic employer in the future? Indonesia is not a member of the OECD.
However, the tax authorities may adopt the economic employer approach if they believe that there is any tax avoidance or abuse. Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach?
If yes, what is the de minimus number of days 2? Income is defined as any economic benefit received or accrued by a taxpayer that is used for consumption or that increases the wealth of the taxpayer, in whatever name or form.
Will a non-resident of Indonesia who, as part of their employment within a group company, is also appointed as a statutory director i. Are there any areas of income that are exempt from taxation in Indonesia? If so, please provide a general definition of these areas. An Indonesian citizen working overseas for more than days in a month period may qualify as a non-resident and, consequently, is exempted from tax on their foreign income in Indonesia, if they can prove that they do not reside in Indonesia.
Additionally, as proof of overseas residence, the individual should be prepared to provide official identification documents showing residence in the foreign territory, such as identity card, student card, employment pass, notification letter from an Indonesian Embassy, or a page in the passport duly stamped by foreign immigration.
Capital gains are treated as normal income subject to income tax. However, sale of locally listed shares are subject to a final tax at 0.
Purchase of domestic real estate is subject to a 5 percent tax on transfer of title. Information in the below table assumes that the option is not cross-charged to the Indonesian entity. Are there additional capital gains tax CGT issues in Indonesia? If so, please discuss?
An individual tax subject who is a resident of Indonesia is allowed the following deductions against employment income:. These deductions are prorated according to the period of residence in the tax year. Additional deductions include the following. Employee income tax is automatically withheld, paid, and reported by the company on a monthly basis as withholding tax obligation rests at the payer.
For personal income, the first year assignee may calculate a conservative amount of monthly income tax to be self-paid and reported to the tax authorities. For example: monthly, annually, both, and so on. The monthly employee withholding tax should be paid and reported by the 10th and 20th of the following month, respectively. The monthly individual income tax should be paid and reported by the 15th and 20th of the following month, respectively.
Is there any Relief for Foreign Taxes in Indonesia? For example, a foreign tax credit FTC system, double taxation treaties, and so on? Indonesian tax can be reduced by tax paid or due abroad on income received or accrued abroad by an individual in the same fiscal year.
The permitted foreign tax credit for such year shall be limited to the total Indonesian income tax due on foreign income. For example, foreign taxes paid in the United States can be claimed only against tax due on U. In the case of a registered resident taxpayer, tax due for a tax-year may be reduced by the following:.
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The Facts about Annual Tax Return in Indonesia
This is a brief overview of the requirements, calculation and payment of personal income taxes in Indonesia. Your employer is the body responsible for the calculation of any taxes that need to be withheld from your salary, monthly payment of these taxes to the tax authorities, and provision of annual numbers to the employee. The individual employee must then file an annual income tax return for the year in question. Under the old system, the income tax of an individual who only has one source of income was processed by his or her employer.
Individual / Personal Income Taxes in Indonesia