Sorting through and understanding tax obligations in Bali, or in Indonesia in general, can be a daunting affair. And when you’re an Australian expat, the information is even more complicated.
A common mistake of Australian expats when they first consider moving to Bali is that they are exempt from taxes in Indonesia, and confused about the deadline .
Cekindo has come up with this simple guide to help you understand your tax requirements, and things all Australian expats should keep in mind when living in Bali.
Difference between Personal and Corporate Income Taxes
For corporate income tax, a foreign company with a permanent establishment in Indonesia is subject to a tax rate of 25%.
For an Australian expat’s personal income tax, the tax resident’s rate is between 5% and 30%. There is a 20% withholding tax on income received in Indonesia for non-tax residents.
Learn more about the differences: Corporate tax and personal income tax in Indonesia
Corporate Income Tax for Australian Expats
Corporate income tax is collected from companies run by Australian expat as well.
The amount of corporate tax is based on the business activity during one business year. Corporate tax is demanding, and it depends a lot on periodic accounting and tax reporting for tax compliance.
It is worth noting that corporate income tax is calculated based on accounting principles modified by certain tax adjustments. For business expenditures, tax deductions are allowed.
Due to its complex nature, it is highly advisable to outsource your accounting to a third party to handle corporate tax issues.
Personal Income Tax in Indonesia
Australian expats who are considered Indonesian tax residents must pay personal income tax on all earned income, including income generated overseas, or worldwide income.
To be considered as a tax resident in Bali, an Australian individual must be present in Indonesia for no less than 183 days during a 12-month period, regardless of their types of visa. Bear in mind that the 12-month period is not the calendar year.
Australian expats who are not tax residents are only taxed on their income generated in Indonesia. Non-tax residents stay in Indonesia for less than 183 days during a year.
Personal Income Tax Exemption
For some Australian expats, although they are present in Indonesia for more than 183 days in 12 months, are exempted from personal income tax due to their special legal status. According to Indonesian Income Tax Law, these exemptions are
a) Foreign diplomatic and consular personnel
b) Civilian employees and military personnel of foreign armed service
c) Representatives of international organization specified from time to time by the Minister of Finance
Other Tax Obligations for Australians
In addition to personal and corporate taxes, you are required to pay contributions for social security schemes in Indonesia as an Australian expat.
These contributions include manpower scheme (BPJS Ketenagakerjaan) and the healthcare scheme (BPJS Kesehatan), compulsory for both citizens and expats in Indonesia, who work in Indonesia for at least 6 months.
The proof of these contributions is required for the renewal of your work permit in Bali
Learn more in our article Work Permit in Indonesia from A to Z.
Tax ID for Australian Expats in Bali
First of all, Australian expats considered as tax residents will have to register as a taxpayer with receipt of a tax number – Nomor Pokok Wajib Pajak (NPWP).
On the same note, you must also cancel your NPWP if you leave Indonesia permanently. It is not worthy to take NPWP lightly because you are subject to a penalty of 20% without an NPWP.
Deadline for Tax Submission
The deadline for Australian expat’s personal income tax submission is on 31st March. For corporate, the tax submission must be lodged within four months after the end of the taxable year.
Both tax submissions are done at the tax office where expats are registered.
Contact Cekindo or fill in the form below to get more details regarding the tax obligations for Australian expats living in Bali.
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