The following is an example of calculating the imposition of income tax cited from Appendix V of PMK 18 of 2021 regarding the Implementation of the Job Creation Law (Tax Cluster). Our article regarding the criteria, requirements, and type of jobs that are eligible for the imposition of tax only for the income earned from Indonesia is available here.

 

Example 1

Mr. MS is a biophysics lecturer from the United States. On January 2, 2021, Mr. MS came to Indonesia and taught for 6 (six) months at one of the international high schools (SMA) in Indonesia in order to help prepare for the international physics Olympiad competition.

 

On July 1, 2021, Mr. MS signed a contract to become a biophysics lecturer at ABC University in Indonesia for 4 (four) years. Mr. MS has intended to live and work in Indonesia for more than 183 (one hundred and eighty-three) days. Mr. MS registered himself as a Taxpayer at the Tax Office whose working area included the location of his residence on January 2, 2021.

 

For the 2021 Tax Year, Mr. MS earns income from 3 (three) sources of income, namely:

a. Income from teaching activities as a physics teacher at an international high school (ISCO / KBJI code: 2320), which is not included in a certain post as referred to in the Attachment to this Ministerial Regulation; 

b. Income from teaching activities as a biophysics lecturer (code ISCO / KBJI: 2310) at ABC University, which is included in a certain post as referred to in the Attachment to this Ministerial Regulation; and

c. Interest income on private corporate bonds from Malaysia.
 

As of July 1, 2021, Mr. MS has met the criteria as a foreigner with certain expertise who can be subject to income tax only on income originating from Indonesia. To be able to apply these provisions, Mr. MS is required to submit an application as referred to in Article 11 of this Ministerial Regulation.

 

If this application is approved by the Tax Office where Mr. MS registered, Mr. MS can be subject to income tax only on income originating from Indonesia starting from January 2, 2021, to December 31, 2024. On the bond interest income from Malaysia, Mr. MS cannot utilize P3B Indonesia and Malaysia since the issuance of the approval letter for the application for imposition of income tax only on income received or obtained from Indonesia.

 

If Mr. MS utilized the Tax Treaty on the interest income in 2021, Mr. MS is subject to Tax on income originating from Indonesia and outside Indonesia for the 2021 Fiscal Year. MS is not approved, Mr. MS is subject to Tax on income originating from Indonesia and from outside Indonesia.

 

Example 2

Mr. AB is a citizen of Japan. On January 2, 2018, Mr. AB signed a work contract for 1 (one) year with the construction company PT. DEF in Indonesia to hold a position as a business development manager (code ISCO / KBJI: 1223). Mr. AB has been registered at the Tax Office whose working area includes the location of his residence on January 2, 2018.

 

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After the contract ended, Mr. AB returned to Japan and settled there. Mr. AB returned to Indonesia after signing a new work contract with PT. DEF for a new position, namely the head of a field engineering expert project (ISCO / KBJI code: 2142) for a period of 3 (three) years from 1 April 2020 to 31 March 2023.

 

For the example above, Mr. AB earns income from 2 (two) sources of income:

a. Income as manager of business development PT. DEF (code ISCO / KBJI: 1223), not included in the certain post as referred to in the attachment to this Ministerial Regulation; and

b. Income as the head of the project field engineering expert PT. DEF (code ISCO / KBJI: 2142), which is included in the certain post as referred to in the attachment to this Ministerial Regulation.

 

As of April 1, 2020, Mr. AB has met the criteria as a foreigner with certain skills who can be subject to income tax only on income originating from Indonesia. To be able to apply these provisions, Mr. AB is obliged to submit an application as referred to in Article 11 of this Ministerial Regulation.

 

If this application is approved by the Tax Office where Mr. AB is listed, Mr. AB:

 

a. For the 2020 Fiscal Year: 1) April 1 to. November 1, 2020, is subject to Tax on income originating from Indonesia and from outside Indonesia; 2) November 2 to November 2 December 31, 2020, is subject to Tax only on income originating from Indonesia;

 

b. Fiscal Year 2021: January 1 s.d. December 31, 2021 is subject to Tax only on income originating from Indonesia;

 

c. Fiscal Year 2022: January 1 s.d. December 31, 2022 is subject to Income Tax on income received or earned, both from Indonesia and from outside Indonesia. This is because the period of 4 (four) Fiscal Years as referred to in Article 9 paragraph (1) is calculated from Fiscal Year 2018 to Fiscal Year 2021;

 

d. Fiscal Year 2023: January 1 s.d. March 31, 2023 is subject to Income Tax on income received or earned, both from Indonesia and from outside Indonesia.

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