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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
Navigating Bali’s local tax laws and regulations may be confusing for a digital nomad, especially if you are new to the island. This article offers a more in-depth look at the requirements and regulations related to digital nomad tax in Bali, including tax rates and foreign taxes.
What Makes A Digital Nomad A Tax Resident in Bali?
A digital nomad is an Indonesian tax resident if:
- They are present in Indonesia for more than 183 days within 12 months; or
- Present in Indonesia during a tax year with the intention of residing in Indonesia. This intention is proven by being a KITAS holder, including: Remote Worker Visa E33G, regardless of the days of stay
As such, you are subject to Indonesian tax laws on your global income.
If you are planning to work in Bali, refer to how to work in Bali as a foreigner.
How Much Should Digital Nomads Pay in Taxes?
- Non-residents are taxed on 20% of Indonesian-sourced Gross Income only.
- Indonesian Tax Residents are taxed on worldwide income.
- Foreign employees meeting “certain skills” requirements can be exempted from worldwide income reporting for four years from their first arrival in Indonesia.
The tax rate percentage for Indonesian tax residents is as follows:
| Taxable Income (IDR) | Tax Rate (%) |
| Up to IDR 60 million | 5 |
| Above IDR 60 million to IDR 250 million | 15 |
| Above IDR 250 million to IDR 500 million | 25 |
| Above IDR 500 million to IDR 5 billion | 30 |
| Above IDR 5 billion | 35 |
Tax residents must apply for a Tax Card (NPWP) and file their income tax return. A 20% surcharge is applied if they fail to obtain NPWP.
Waiver for Foreign Taxes
Being taxed on your Worldwide Income can be overwhelming while staying in Bali. The taxes can be reduced if you have paid taxes abroad on your income. Allowed tax credits are limited to the following:
- Tax treaty rate through Double Tax Avoidance Agreement.
- The actual tax amount that has been paid from the other country.
Penalties For Non-Compliance
If you fail to comply with these regulations, there are heavy penalties, legal consequences, and surcharges that you should keep in mind which can impede your business operations. The penalties include:
- Tax Penalties: If due to negligence, the penalty is 1 or 2 times the amount of underpaid tax. If deliberate, the penalty is 2 to 6 times the tax amount.
- Delayed Surcharges: Those who do not pay their taxes on time will face additional charges based on a percentage of the unpaid tax amount, ranging from 5% to 10% depending on the duration of the delay.
- Criminal Charges: These are for more severe violations, including submitting false information, refusing tax audits, and fraudulent tax documents. Depending on the severity, you can get a penalty of 2 to 4 times the amount of underpaid tax and a prison sentence ranging from 6 months to 6 years.
- Late Filing Penalties: For late filing of individual income tax returns you can receive a fine of up to IDR 100,000. For late filing of corporate income returns, you receive a fine of up to IDR 1 million.
- Distress Warrant (Surat Paksa): If taxes remain unpaid, a distress warrant will be issued for collection which can lead to further legal action and financial penalties.
Staying Compliant with Emerhub
Emerhub offers comprehensive tax and accounting services for you to stay compliant with local tax laws and avoid fines. Our local experts will advise you on the process and secure mandatory documents such as the personal tax card (NPWP) on your behalf.
For more information, fill out the form below and one of your tax and compliance experts will get back to you.
