If you're moving to Indonesia, here's how taxes work

Nobody likes tax surprises in a new country. Here's exactly how Indonesia's tax system affects expats, with real numbers and rates.

Tax System Overview

Income Tax in Indonesia

Indonesia operates a progressive income tax system, meaning higher earners pay a higher percentage on their income above certain thresholds. The top marginal rate is 35%.

What Does This Mean in Practice?

On a gross annual salary of €90,000, you would pay an effective tax rate of approximately 11.8%, resulting in a net monthly income of approximately €5,880. This accounts for income tax and mandatory social contributions.

For context, the average monthly salary in Indonesia is approximately €295.

VAT (Value Added Tax)

The standard VAT rate in Indonesia is 11.0%. VAT is included in consumer prices and applies to most goods and services. Reduced rates typically apply to:

• Basic food items and groceries
• Medical supplies and pharmaceuticals
• Books and educational materials
• Public transport (in some cases)

Special Tax Regimes for Expats

No special tax regime for expats

While Indonesia may not have a widely publicised expat tax regime, there may be bilateral tax treaties with your home country that prevent double taxation. Check if a Double Taxation Agreement (DTA) exists.

Tax Filing Requirements

As a tax resident of Indonesia, you are generally required to:

1. Register with tax authorities upon establishing residence
2. Obtain a tax identification number
3. File an annual tax return (deadlines vary)
4. Declare worldwide income if you are a tax resident
5. Report foreign bank accounts if applicable

Double Taxation

Indonesia has double taxation agreements (DTAs) with numerous countries. These treaties determine which country has the right to tax specific types of income and help prevent you from being taxed twice on the same income. Before moving, check whether a DTA exists between Indonesia and your home country.

Tax Tips for Expats

• Hire a local tax adviser familiar with expat situations during your first year
• Keep records of all income, deductions, and tax payments from day one
• Understand residency rules: most countries consider you a tax resident after 183 days
• Check for exit tax: some countries impose tax on unrealised gains when you leave
• Social security contributions are often separate from income tax and can add 10-20% to your total burden

Additional Practical Information

The following information is compiled from expat community sources and recent reports to complement the official data above.

Additional Data Points

Recent reports and expat sources provide these additional figures for Indonesia:

• If you plan to live in Indonesia for more than 183 days over a period of 12 months, you will be considered a resident taxpayer from the date of your arrival. This article tells you more about your tax obligations during your stay as an expat in Indonesia .
• When working in Indonesia , you will be required to pay local taxes, regardless of how long you have been in the country or how much you earn. According to the Indonesian constitution, the income of any person working in the country is indeed taxable, regardless of his or her salary. There is a minimum amount of 5% tax which is applicable to the lowest incomes, but there are, on the other hand, tax relief measures that can be applied in certain cases as well.
• In Indonesia, failure to pay taxes on time is subject to interest surcharges, which are calculated according to the interest rates set by the Ministry of Finance and that may vary according to the amount to be settled by the taxpayer. Moreover, failure to file a tax return on time is punishable by a late filing fine of IDR 100,000. Under certain circumstances, this can be considered a criminal act that can result in a prison sentence.
• If you stay in Indonesia for more than 183 days in a year, your professional income becomes taxable, regardless of the country of origin. In addition to monthly salaries, taxable income includes bonuses, commissions, and any allowances, such as housing, education and medical care. You should also be aware that the amount of tax you pay will depend on your residency status. There are different types of visas in Indonesia , and each of these categories is subject to a specific tax regime.
• As a resident taxpayer, you must register with the Indonesian tax office and obtain a tax identification number, the Nomor Pokok Wajib Pajak (NPWP). You will also need to have this tax identification number "cancelled" when you leave Indonesia permanently. Those who do not have an NPWP may be subject to a 20% surcharge in addition to the basic income tax rates.
• While living in the country, you will be taxed on your foreign income, regardless of the source, so you will need to file an annual tax return on your income, assets and liabilities. You must keep all documents showing your income, taxes paid, assets, and liabilities reported on your tax return for a minimum period of 10 years. These may include bank statements, foreign tax returns and property certificates.

Additional data sourced from expat community reports. All information should be verified with official sources.