Living in Indonesia: three residency criteria and income taxation

In Indonesia, an individual is considered a domestic taxpayer (subjek pajak dalam negeri) if they meet one of three criteria: they are domiciled in Indonesia, they are present in Indonesia for more than 183 days in any 12-month period, or they are present in Indonesia during the tax year with the intention of residing there. This criterion applies to both Indonesians and foreigners, with an exception for certain Indonesians residing outside of Indonesia. Tax is levied on income from both Indonesia and foreign sources, but a foreigner can request to be taxed only on their Indonesian income or invoke a tax treaty. The tax rate is progressive, with income brackets. This page does not cover social security, wealth tax, or visas.

Three criteria, only one is enough

Article 2, paragraph 3, of the Income Tax Law, as consolidated and published by the Directorate General of Taxes (2020 version, following Law No. 11 of 2020), classifies among domestic taxpayers the natural person who:

1. at his domicile in Indonesia («bertempat tinggal di Indonesia»); ;
2. is present in Indonesia for more than 183 days over a period of 12 months (the written text "lebih dari 183 (seratus delapan puluh tiga) hari dalam jangka waktu 12 (dua belas) bulan"); ;
3. is present in Indonesia for one tax year and intends to reside there.

The threshold is "more than 183 days," not "183 days or more." The period is 12 months, not the calendar year. A page from the Expatriate Tax Directorate (October 28, 2024) reiterates the 183-day criterion and clarifies that foreign workers are treated like Indonesians for their tax obligations. Implementing Regulation PMK No. 18/PMK.03/2021, in effect since February 17, 2021, incorporates the domicile and intention to reside requirements from the official notice of the State Regulatory Base (BPK); it is partially repealed (Articles 107, 108, and 114).

Paragraph 4 of the same article defines external taxpayers. It includes in this category:

• the natural person who is not domiciled in Indonesia; ;
• foreigners present in Indonesia for a maximum of 183 days in 12 months; ;
• Indonesian citizens who are outside Indonesia for more than 183 days in 12 months and meet certain conditions (place of residence, center of main activities, place where they habitually practice their lifestyle, taxpayer status, other conditions) the details of which are set by regulation of the Minister of Finance; ;
• the foreign entity, with or without a permanent establishment in Indonesia.

Revenues from Indonesia and abroad

Article 4, paragraph 1, defines taxable income as any additional economic capacity received or obtained, "baik yang berasal dari Indonesia maupun dari luar Indonesia," meaning from Indonesia or abroad. This wording appears in the consolidated text of 2020; the later page from the Directorate General of Expatriate Tax states the same thing and adds a practical point: the employer withholds the tax under Article 21 from wages paid in Indonesia, but income from foreign sources is generally not subject to withholding. The expatriate must then calculate and pay it themselves.

The option of going abroad. Official notice PMK No. 18/PMK.03/2021 stipulates that a foreigner may choose to be taxed only on income received or earned in Indonesia, or invoke the tax treaty between Indonesia and the country where they receive foreign income. A foreigner opting for taxation solely on Indonesian income must submit a request to the Director General of Taxation. The conditions and procedures should be verified with a professional based in Indonesia.

Annual scale for natural persons

Law No. 7 of 2021 on the Harmonization of Tax Rules (UU HPP) changed the personal income tax brackets. A presentation from the General Directorate of Taxes dates the effective date of the reform to the 2022 tax year. The brackets confirmed by the General Directorate of Taxes website, in Indonesian Rupiah (IDR), are as follows.

The tax rate above 5 billion is subject to two official interpretations. Two pages from the Directorate General of Taxes (the first dated December 21, 2021, the second undated) indicate it as 35 %. A presentation by the Directorate General of Taxes on the law places this rate in the column of the previous law and not in that of the reform. This page does not provide a definitive answer: the higher tax bracket in the text of Article 17 must be verified before any decision is made. The amount of non-taxable income, deductions, and the tax on non-residents are not described here.

190 days and 600 million IDR: a numerical example (fictitious profile)

Situation. Claire, a fictional profile, lives in Indonesia for 190 days over a 12-month period. Her annual taxable income is assumed to be IDR 600,000,000. Both figures are hypothetical.

Issue. She wants to know if she is a domestic taxpayer and estimate the tax according to the tax scale.

Strategy. She compares her 190 days to the threshold of "more than 183 days", then divides her income into brackets.

Result. With 190 days, she meets the residency requirement and is a domestic taxpayer, subject to the foreign resident option described above. The tax brackets yield IDR 3,000,000 on the first bracket (60 million to 5 %), IDR 28,500,000 on the second (190 million to 15 %), IDR 62,500,000 on the third (250 million to 25 %), and IDR 30,000,000 on the fourth (100 million to 30 %). The total is IDR 124,000,000, representing an average rate of 20.7 %. Her income remains below 5 billion: the higher bracket does not apply in this example. This calculation does not take into account deductions, tax credits, or reporting requirements, which we have not determined.

What this page does not cover

This page does not address the taxation of dividends, interest, and capital gains under domestic law, wealth or inheritance tax, Indonesian social security contributions (which should be verified with CLEISS), or residence permits. Withholding taxes between France and Indonesia, the articles of the convention of September 14, 1979, and the elimination of double taxation are described on our page on [the topic of] France-Indonesia tax treaty. Local tax matters are handled through a professional based in Indonesia. French tax issues, including the departure tax return and the accounts to be declared, are addressed in our pages on tax residency and exit tax.

What changes depending on your situation

• The number of days spent in Indonesia over each 12-month period.
• The existence of a residence in Indonesia and your intention to reside there.
• Your nationality: the foreign option does not apply to Indonesian citizens.
• The portion of your income that comes from abroad and how it is declared.
• Your employer and the deduction under Article 21 from your pay.
• Your taxable income level determines your tax bracket.

The rule depends on your situation. No results are guaranteed.