Domestic or Overseas Tax Subject of Individuals: Beyond Nationality Issue
Whether or not an individual is a Domestic or Foreign Tax Subject is determined by the residence place of living, the presence, and the plan to reside in Indonesia. It refers to Article 2 paragraph (3) letter a of the Income Tax Law (Law No. 7 Year 1983 as lastly amended with Law No. 36 Year 2008). Further, the DGT Regulation No. PER-43/J./2011 stipulates the determination of Tax Subject status for individual taxpayers, as summarized below.
Individual Taxpayer Residing in Indonesia
An Individual Taxpayer residing in Indonesia thus becoming a Domestic Tax Subject is the Individual who has:
- residence place for the purpose of:
- presence, which is not temporary and not as a transit;
- conducting daily activities or conducting its habitual activities; or
- place of habitual activities.
- domicile place in Indonesia as the individual’s birth place and currently still being presence in Indonesia.
What the Word of Presence in Indonesia Means
The term of ‘presence’ in Indonesia for the individual Tax Subject refers to the factual presence condition of the Tax Subject in the territory of the Republic of Indonesia within a certain period of time. In case the presence in Indonesia exceeds 183 days within 12 months – either continuously or partly and counted as 1 (one) full day-, the Individual Taxpayer is considered Domestic Tax Subject.
When an Expatriate is Deemed Planning to Reside in Indonesia
An expatriate will be deemed planning to reside in Indonesia thus becoming a Domestic Tax Subject, in case of:
- Presenting its intention to stay in Indonesia by showing:
- Working visa or Limited Stay Visa (KITAS); or
- Contract of work, business or activity in Indonesia,
to confirm the presence in Indonesia of more than 183 days.
- Conducting an activity showing that the expatriate shall or shall be ready to reside in Indonesia, among others by renting a place, moving the family members or being provided a place by another party.
What about an Indonesian Citizen Going Abroad
An individual residing in Indonesia and later going abroad will still be deemed residing in Indonesia (as Domestic Tax Subject) in case:
- the presence in overseas is mobile; and
- the presence in Indonesia is more than 183 days within 12 months.
On the other hand, the persons will no longer be deemed residing in Indonesia (becoming Foreign Tax Subject) if they reside in overseas based on:
- Green card;
- Identity card;
- Student card;
- Validation of the address in overseas in the passport by the Republic of Indonesia (RI) Representative Offices in overseas;
- Statement Letter from the RI Embassy or Representative Office in overseas; or
- Official written note in the passport by the local Immigration Office.
The above documents shall be fulfilled cumulatively. If otherwise, an individual taxpayer will be still deemed as Domestic Tax Subject regardless the actual current presence.
From Domestic Tax Subject to Foreign Tax Subject
For individual tax subjects, the status will be changed if:
- Leaving Indonesia in a perpetual length of time ; or
- Working overseas for more than 183 days within 12 months.
The status change is valid by the time the Individual Tax Subject leaves Indonesia. However, even though the Individual has become a Foreign Tax Subject on its leaving, the Individual shall still file the Annual Income Tax Return for the last tax year of its status as Domestic Tax Subject, at the latest when the Tax Subject leaves Indonesia.