Bali has long been a paradise for digital nomads, offering breathtaking landscapes, a thriving expat community, and a relatively low cost of living. However, one crucial aspect that often gets overlooked is tax obligations. If you’re working remotely in Bali, you need to understand how Indonesian tax laws apply to you.
This guide simplifies the complexities of digital nomad tax in Bali, ensuring that you stay compliant and avoid hefty penalties.
Also read: Working in Bali for Foreigners: Opportunities and Requirements
Who is Considered a Tax Resident in Indonesia?
Before discussing the main topic, you need to know the rules of taxation in Indonesia. Under Indonesian tax law (UU PPh, Article 2, Paragraph 3), you are considered a tax resident if:
- You stay in Indonesia for more than 183 days within a 12-month period.
- You hold a visa that implies tax residency, such as a KITAS (Limited Stay Permit Card) or the Indonesia Remote Worker Visa (E33G), and reside in the country for over six months.
- You intend to live in Indonesia long-term, even if your stay is shorter than 183 days.
As a tax resident, you are subject to Indonesian income tax on your worldwide income, meaning earnings from both Indonesian and foreign sources are taxable.
If you stay in Bali for less than 183 days, you are classified as a non-resident and are only taxed on Indonesia-sourced income at a flat rate of 20%.
How Much Tax Do Digital Nomads Pay in Bali?
Indonesia applies a progressive income tax system for residents:
| Taxable Income (IDR) | Tax Rate (%) |
|---|---|
| Up to 60 million | 5% |
| 60 million – 250 million | 15% |
| 250 million – 500 million | 25% |
| 500 million – 5 billion | 30% |
| Above 5 billion | 35% |
For non-residents, the flat tax rate is 20% on Indonesian-sourced income.
Also read: Bali Property Tax: A Complete Guide
How to Avoid Double Taxation?
Many digital nomads worry about double taxation, where they pay taxes both in Indonesia and their home country. However, Indonesia has Double Tax Avoidance Agreements (DTAA) with several countries, which help prevent this issue.
To claim DTAA benefits, you need to:
- Provide a Certificate of Domicile (CoD) from your home country.
- Show that you are a tax resident elsewhere and meet Indonesia’s anti-abuse regulations.
- Demonstrate economic substance, such as employing staff or running a business with significant activity.
Also read: Tax Treaty Indonesia: DTAA Countries List and Complete Guide
Impact of Visas on Tax Status
For each type of permit, you must consider these conditions:
- KITAS & KITAP Holders: If you hold a KITAS (Limited Stay Permit) or a KITAP (Permanent Stay Permit) for over 183 days, you are taxed as a resident.
- Remote Worker Visa (E33G): If you stay beyond six months, you become a tax resident, and your worldwide income is taxable in Indonesia.
- Tourist Visa & Visa on Arrival: If you are on a short-term visa and stay for less than 183 days, you are not a tax resident and are only taxed on Indonesia-sourced income.
Also read: Bali Digital Nomad Visa: Requirements and How to Apply
What Happens If You Don’t Pay Taxes?
Failure to comply with Indonesia’s tax regulations can result in severe penalties:
- Tax Penalties: If you underpay taxes due to negligence, you may owe 1 to 2 times the amount of unpaid tax. For deliberate tax evasion, penalties range from 2 to 6 times the unpaid amount.
- Late Payment Surcharges: If you delay tax payments, you may face surcharges between 5% and 10%.
- Criminal Charges: Submitting false tax information, evading audits, or forging documents can lead to prison sentences of 6 months to 6 years.
- Late Filing Fines: Individual taxpayers may be fined IDR 100,000, while corporate taxpayers can face fines up to IDR 1 million.
- Distress Warrant (Surat Paksa): The Indonesia Directorate General of Taxes (DJP) can issue a Surat Paksa (Distress Warrant) for unpaid taxes, leading to legal action and asset seizure.
Also read: Tax Avoidance in Indonesia: What Foreigners Need to Know
So, Is There No Tax in Bali for Remote Workers?
Here are some points that can be noted:
- If you stay in Bali for more than 183 days, you are a tax resident and must pay taxes on global income.
- Non-residents only pay tax on Indonesian-sourced income at a 20% flat rate.
- Double Tax Avoidance Agreements (DTAA) can help you avoid double taxation, but you must provide a Certificate of Domicile (CoD).
- Different visa types impact tax obligations—longer stays generally mean higher tax liabilities.
- Failure to comply may lead to substantial fines, legal consequences, or even imprisonment.
Also read: Is Bali a Tax Haven for Foreigners?
Navigating Indonesian tax laws can be complex, especially for digital nomads with income from multiple countries. To ensure compliance, you can consult with InvestinAsia’s Indonesia tax consultant and compliance services.
Our experienced team of professionals is ready to assist you in every tax matter, such as:
