Indonesian taxation laws are primarily based on Article 23A of the 1945 Indonesian Constitution. Article 23A states that tax is an enforceable contribution to be imposed on all Indonesian citizens, foreign nationals, and tax residents.
A foreigner can become an income tax resident as it is defined as someone who has been residing in Indonesia for 183 cumulative days within a 12-month period or someone who is present in Indonesia with the intention of residing in Indonesia.
Income sourced in Indonesia is taxes at a progressive rate of 5% to 30% depending on the sum of income. This is applicable for residents and tax residents of Indonesia only. As for non-tax residents, foreigners working in Indonesia for less than 183 days will have their income subjected to a standard rate of 20% tax.
It is advised to research on tax exemptions as there are exemptions applicable for both individuals and companies alike that may lessen the tax burden.
The common tax laws that should be noted are:
In the case of any indication of criminal activity is recognised, the case will be decided by the district court if any criminal proceedings are required to be performed.
Some tax-related objections that are brought before the administrative court are: