Foreign workers who work in Indonesia are income tax subjects in Indonesia, in Article 2 paragraph (2) of Law Number 36 Year 2008 Regarding Income Tax (hereinafter referred to as the Income Tax Act). Tax subjects are divided into Domestic Tax Subjects and Foreign Tax Subjects. The difference is based on the criteria set out in Article 2 of the Income Tax Law.
Domestic Tax Subjects
Foreign workers categorized as Domestic Tax Subjects are Foreign Workers who are in Indonesia for more than 183 (one hundred eighty three) days within a period of 12 (twelve) months, or individuals who within a tax year are in Indonesia and has the intention to reside in Indonesia (Vide: article 2 paragraph (3) of the Income Tax Act).
Because it has been categorized as a Domestic Tax Subject, the tax treatment given to the Foreign Workers is also the same as the Indonesian Workers in accordance with the provisions of Article 21 of the Income Tax Law. For tariffs and calculation schemes, referring to Article 17 of the Income Tax Act which determines:
|Up to Rp. 50,000,000||5 %|
|Above Rp. 50,000,000 to Rp.250,000.00||15 %|
|Above Rp. 250,000,000 to Rp. 500,000,000||25 %|
|Above Rp. 500,000,000||30 %|
Foreign Tax Subjects
Individual residing in Indonesia for no more than 183 (one hundred eighty three) days within a period of 12 (twelve) months is categorized as a Foreign Tax Subject (Vide: article 2 paragraph (4) of the Income Tax Act).
Then based on Article 26 paragraph (1) of the Income Tax Law, a fixed rate of Income Tax for Domestic Tax Subjects has been determined, which is 20% of the total gross income.
However, tax rates for SPLN from countries that sign tax treaties (known as Double Tax Avoidance Agreements (P3B) with Indonesia, apply special PPh 26 rates, which are usually lower than normal rates.