What Are the Tax Obligations for Australian Expats Who Live in Bali?
Understanding Your Tax Obligations in Bali
Understanding your tax obligations no matter where you live can be challenging. For Australian expats who are currently calling Bali home, you’ll want to get a thorough understand of what your tax obligations are so there is no confusion moving forward.
One of the most common misconceptions made by Australian expats who are living in Bali is that they are exempted from the taxes which are imposed in Indonesia. Potential confusion could also occur as to the deadline of the when taxes should be filed.
If you are an Australian expat living in Bali, here is what you should keep in mind:
What Is the Difference Between Corporate & Personal Income Tax?
Australian expats who are living in Bali will be subjected to a personal income tax resident’s rate which can range from 5% to 30%. Any income which is received in Indonesia will be imposed with a 20% withholding tax for any non-tax resident.
Corporate income tax for foreign companies that have a permanent business setup in Indonesia, those companies will be subjected to a 25% tax rate.
Important Points to Consider with Corporate Income Tax
Companies in Indonesia which are run by an Australian expat will be expected to pay corporate income tax. The rate of tax to be paid will depend on the type of business activity of the company during that business year.
Corporate tax would also depend on the periodic accounting and tax reporting for tax compliance purposes. Corporate tax can be demanding, and an expat’s corporate income tax in Indonesia will be calculated based on accounting principles which are modified by certain tax adjustments.
Tax deductions are allowed for business expenditure. It is highly advisable that Australian expats living in Bali outsource their business accounting needs to a third party due to the complex nature of the taxation system.
Important Points to Consider with Personal Income Tax
For Australian expats who are considered Indonesian tax residents, they will be required to pay personal income tax on all earned income which includes income generated overseas. Income which is derived worldwide will also be subjected to income tax.
An Australian expat is considered a tax resident in Bali if they have lived in Indonesia for no less than 183-days throughout a 12-month period (not the calendar year). This is regardless of the type of visa that they hold.
Australian expats are considered non-tax residents if they are residing in Indonesia for less than 183-days in a 12-month period. Taxes will still be charged based on the income that is generated in Indonesia.
According to the Indonesian Income Tax Law, tax exemptions are permissible for Australian expats living in Indonesia (even if they are living there for more than 183-days in a 12-month period) if they meet the special legal status considerations below:
- They are representatives of an international organization specified by the Minister of Finance
- They are foreign diplomatic or consular personnel
- They are either military personnel or civilian employees of the foreign armed forces
What Other Tax Obligations Should Australian Expats Be Aware Of?
Australian expats will be required to pay the contributions needed for their social security schemes in Indonesia. This is in addition to the corporate taxes and personal taxes which they would need to pay.
BPJS Ketenagakerjaan (Manpower) and BPJS Kesehatan (Healthcare) are compulsory contributions which are required for citizens and expats alike if they work in Indonesia for at least 6-months. Proof of contributions must be submitted during the renewal of your work permit in Bali.
Australia expats who are considered tax residents will be required to register and get a receipt of a tax number known as the NPWP (Nomor Pokok Wajib Pajak). The NPWP must be cancelled when you are going to leave Indonesia permanently. The NPWP must be taken seriously because you could be subjected to a 20% penalty fee without the NPWP.
All Australian expats living in Bali will have until the 31st of March to submit their personal tax incomes. Corporate tax submission must be lodged within the first 4 months after the end of the taxable year. All submissions must be done through the tax office where you are registered as an expat.