Thread: Retirement Visa - Fiskal

For weeks now I have been trying to find out if retirement visa has to pay the new draconian fiskal tax. My visa lady doesn't know and the tax people she consulted are unsure. Another visa agent said yes you do because you have a kitas and anybody with a kitas has to pay. He also said if I applied for a tax number, not only would I have to fill out an income tax form written in Indonesian once a year, I would also have to report my social security retirement income from America and that I would have to pay tax on that. If I have to pay $500 USD every time my wife and I leave the country, that means my wife and I will be paying $300 month for retirement visas, re-entry permits, police reports, fiskal taxes, airport taxes and whatever god-awful surprises sprung on us in the middle of the night without warning. I am just an ole retired professor and we are not rich. A retirement visa is not allowed to work and make money here so the idea of having a tax number is kind of ridiculous, insensitive and impolite. Does anyone have any clarity on this? Has anyone left the country on a retirement visa and did you have to pay the 2.5 million fiskal tax? Thank you for helping.

There is discussion already in the Forum about the Fiskal Tax but most of it is just a repeat of what was said in the newspapers and almost none of it was specific to retirement visa. That is why this is a separate thread. When it came time to re-new our retirement visa last October, we seriously thought about getting a '6 month' social visa instead. On the surface, it looked like it would have been cheaper. We ended up re-newing the retirement visa because the kitas had advantages of medical 'discount', the right to open a bank account, the right to have a driver's license, the right to stay in Bali without having to leave before six months, etc. We made the wrong choice. If the government had given any advance notice about this 5 million tax (for a couple), we would have chosen a social visa instead.

I will not get a Tax Number. On a retirement visa, it is incorrect, inappropriate and insane. Governments and societies have personalities just like people do. I am a psychologist and the thinking behind this tax on old retired people is diagnosable. If they are capable of doing something like this, then they are capable of doing anything. Anything at any time. Yes, getting a tax number is easy. But what happens after that? Filling out x number of pages of income tax forms written in another language is just the beginning. After everybody is on the list, the next step is to enforce all the requirements and fine print. Any reader here has any kind of faith in their methods of enforcement? No thanks. I have nothing to hide, but I don't have enough lifetime left to prove and document that I have nothing to hide. I suspect that those who have rushed down to get a tax number are in for an unpleasant surprise.

Dr Deepak,

I couldn’t agree with you more.

the kitas had advantages of medical 'discount',

Can you please elaborate on this

Thanks

Originally Posted by Dr Deepak

I will not get a Tax Number. On a retirement visa, it is incorrect, inappropriate and insane. Governments and societies have personalities just like people do. I am a psychologist and the thinking behind this tax on old retired people is diagnosable.

I don't quite follow your logic Dr Deepak, maybe things are different in the US, but where I come from everyone is taxed depending on their income - it makes no difference if you are a child, an adult, or a retired person. If you have income, you pay tax on it, including income from social security. So here, everyone has a tax number. What is different with having a tax number in Indonesia if you are living there as well as your home country tax number? What is inappropriate about complying with the same rules as everyone else? Why is a person eligible for a retirement visa any different from a person who does not fit the criteria for that visa? You have chosen to live in a foreign country, there are certain aspects of living abroad that are a pain, old or not.

The reason that countries have recripocal tax agreements is to ensure that you do not have to pay tax twice. The reason there are tax accountants is to fill out the tax forms for you.

I can't imagine how it would be workable to exclude a certain section of expats on a particular visa from the general rules for taxation. We certainly don't in Australia and I think you will find that they don't in the USA either (for expats living in the US) whether they are old or not.

A Retirement Visa is not allowed to work or earn money in Indonesia. Therefore, why is a Tax Number required to pay tax on income which cannot be earned? They sprung this surprise without taking retirement visas into consideration or else they plan to begin taxing the retirement pensions of foreigners. It is not true that I am protected because of the policy of no 'double taxation'. In the USA, my pension is so small that I do not even have to file a tax return. Here, if a person makes 1 million a month, they are liable for tax. This is what I pay my pembantu. I do not see the right that Indonesia has to tax the pension I started paying into 50 years ago in another country. Nor was it ever explained to me that by paying $200 USD month for the privilege to live here that I would also have to pay tax on my retirement income or any other income I make in another country. I strongly object.

For those thinking of pursuing a Tax Number, some practical information from Bali IDE is that it cost 200,000 to get the number (before March '09) and 2.5 million for them to file a monthly/annual report. What the Taxation Dept. does with the report is unknown.

Unless you are living entirely on savings, and you don't get any interest on those savings, then you have income. Income may include a pension or annuity, rent received from a property you own, interest earned on bank accounts, dividends on shares, etc, etc, earned anywhere in the world.

Technically, all your income has been subject to tax assessment right from when you got your first visa - Soc. Bud. or KITAS, and from what I have read on another expat website, under the law you are required to register for tax with potential jail terms if you don't. It makes no difference where the income comes from - Indonensia or the USA.

There has been no rule change - since 1984 you have been required to have a NPWP and to file a tax return. Even if you have a KITAS as a retiree, even if you are on a social visa and reside in Indonesia for more than 183 days - there are a bunch of tests as to what 'reside' means, but if you have a long term contract on a house and employ a maid you meet the test.

However, up until now, that rule has not been enforced. The difference is that now it is beginning to be enforced.


All that being said, I certainly would not be running out to get a NPWP if I was still living in Indonesia, not until it becomes a lot clearer as to what the ramifications are for expats who are not working in Indonesia but living there and not working. I agree that those who have raced out and registered just to save on fiskal exit tax could be in for a real headache.

There are other ways to avoid or reduce fiskal if it is that important, for example - fly out to Penang from Medan - no fiskal. There are also reductions on fiscal when going from Batam to Singapore by boat.

I think your best bet is to lay low, cough up the fiskal when you fly out or look into some of the cheaper ways as above. For low income retirees like yourself, trying to have a better retirement than what would be available back home on the same income, it is best to bide your time a bit and see what happens.