Adam
Thank you Davita,
I was actually hoping you would be one to reply :)
Thank you for your reply. I have many things to consider at the moment, any information is kindly appreciated. Will maybe correspond by pm if that is ok?
Cheers,
Adam
sakumabali
Unfortunately the bank guarantee doesn't go til 7.5 M, most banks just cover approx. 2 M in case of bankruptcy.
Plus a weak Rupiah & deducted taxes. 5-6 % interest / yearly if you have (theoretically) 7.5? You can easily do much better my man ;)
Adam
sakumabali wroteUnfortunately the bank guarantee doesn't go til 7.5 M, most banks just cover approx. 2 M in case of bankruptcy.
Plus a weak Rupiah & deducted taxes. 5-6 % interest / yearly if you have (theoretically) 7.5? You can easily do much better my man ;)
Please enlighten me my man, I am am all ears. ;)
I want out
Nydave
Hi Adam,i cant offer any advice on the banking part of your post,but you seriously need to think deeply about getting a place in Java,i only live in Ri for 5 months a year,we used to live in Bali and my wife is from Surabaya,she convinced me that we should move to Javea(surabaya) i think was 4 yrs ago,this was the biggest mistake i have ever made,Sure Surabaya is a big city,but there is nothing to do here,
Being frustrated where you are now is one thing,maybe rural Java sounds great right now,but think of it long term,perhaps its just me but there is only so much isolation i can handle,and im talking about a city here in Java,as for cost of living i find Java to be more expensive than Bali,meaning grocery items,
Adam
Hi all,
Have recently become increasingly disgruntled with my professional and personal life in Australia and genuinely considering throwing in the towel and pursuing the simple life in Indonesia. Have some questions which i have researched to some extent but would love to hear the input from some of the folks here, a place I have held close to my heart for a long time.
Does anyone have any experience with term deposits in Indonesia? It seems that interest rates of up to 6.5% can be obtained and deposits guaranteed on sums up to 2 milyar. Say I had 7.5 milyar to invest, any suggestions as to how, and if the dividends would be a realistic amount to live off. As a background to this question I would hope to be living on a Kitas suami in rural Java. Any other suggestions? I would be quite happy to completely remove my assets from Australia if so required so long as there was some form of guarantee.
My dream at the moment would be to simply buy a small plot in Java and do some personal gardening. Would this be outside the scope of a Kitas Suami? I hope to spend a few years improving my Bahasa Indonesia skills in an attempt to find employment at a later stage within the academic community (Ilmu) but for time being just happy to escape to my own personal bubble.
Any input would be appreciated. Going crazy at the moment, just struggling to take that leap of faith.
Kindest regards,
Adam
Mark
I'm earning just over 6% annually with an Indonesian money market fund, Mandiri Investa Pasar Uang, ticker MANINPU. At 6% pa on 7.5M your gross annual income would be 450 juta. After income tax, your net would be 367.5 juta (effective tax rate of 18.3%). Hard to say how well you could live off this amount, depends of course on lifestyle. Probably doable though in rural Java. Good luck with the deliberations.
Ps. I like some of sakumabali's suggestions of alternative investments, especially the domestic ideas, but would be pretty careful with either gold or bitcoin. My two cents...
davita
Hi Adam...I can hear your frustrations and can commiserate but hasten to add....Indonesia can also be a very frustrating place to live...but it's up to yourselves as to your capacity for Namaste...if you don't let the silly things that happen here get under your skin you will enjoy.
Once you have a bank account you can fix any term Fixed Deposits (FD).
The current rate is a little lower than previous but 6% is achievable, and more if you take some risk in the Rakyat banks, but the Gov't only guarantees at the normal rate so anything higher will not have that gov't insurance. They also retain 20% off the interest for tax.
Your Kitas/Kitap suami allows you to do many things except work for a company or similar...working in your wife's business etc is accepted.
Finding employment as a teacher is also OK.....you will need a work permit (IMTA) from the school but you should retain your spousal Kitas/Kitap.
It's late here and I'm off to bed ...any questions please fire away and I'm sure many will respond.
sakumabali
Well I can't say too much in an open forum but there are (were perhaps on bali) much better & smarter things to do...
In 2005 the land prices (both "Hak Sewa" and "Hak Milik") were really interesting. Yes foreigners can't [B]own[/B] land etc but having a nice 50-75 years lease on a good plot can be really nice as well. And it's in your name as well. Expect prices in good areas to go up (ehem don't invest in Lombok). I quote a friend on bali who said "only idiots give their money here to Banks for interest" mmmhhh
Invest [U]some money of it[/U] in a business where you get passive incoming. Buy gold. Bit coins. Cows or goats & pigs. Land banking. Electricity (a bit expensive but with a government contract awesome). Chicken. Planting trees. Fish Farms & Aquaponic....Build villas & rent them....
spicyayam
Don't forget to take inflation into account, around 4%. Also investing all your money in rupiah would be a mistake in my opinion. Better to try and diversify. Different currencies, investments etc.
Certainly take time off a year or whatever, but I would suggest trying to keep working even part-time and/or starting a business. Something internet based. I think you will find some opportunities to start a business in Java or wherever you end up living. Buying or building a kos is one example.
If I was just moving here now I would consider moving to one of the more developing tourist destinations, such as Labuan Bajo, Sumbawa. I am sure lots of opportunities there for a business.
Mark
spicyayam wroteDon't forget to take inflation into account, around 4%.
A very good point.
spicyayam
It's American focused but this is a good website to get some ideas:
https://www.mrmoneymustache.com/
ronb
Following up on Davita, inflation in Indonesia is currently 3.8%, while in Australia it's 1.9%. This difference shows up over time in the exchange rate, so over the past 10 years the rate has gone from 7,500 to 10,500. So you have to think are you better leaving your money in Australia?
Then of those interest rates here, currently under 7%, a withholding tax of 20% is taken from your earnings.
Billt4SF
This is a bit off-topic but maybe it will help.
My wife and I moved from San Francisco to Bali a year ago. Loved it (we are retired), though we were irritated at many things...like unsafe electric wires, Balinese staff that simply would not do what we asked, no matter how many times we asked, etc.).
After 9 months, we had to go back to SF for medical reasons (even though we were diggin' it here) and guess what -- we loved it back in SF! All the stupid things that drove me nuts in SF (like car alarms, double-parkers, dogs barking everywhere..) didn't do so any longer. Of course, after 9 months they started to do so again...
My point is that there is a value to moving (or at least visiting) to get away from whatever, but then, every place has its irritations as Davita said.
Good luck and enjoy the journey!
- Bill
davita
I've been retired since I was 53 in 1990...yep, I'm now 80....so I offer some principles and sage advice....
1. If one thinks of retiring young just because of being fed-up with their job.....think again.
2. If one thinks they have enough money to retire on for the rest of their lives.....probably haven't.
3. If one thinks of retiring to some tropical paradise and burn the bridge to their origin.....don't.
These principles aren't cast in stone and there can be many modifications.
1. At a certain age, there's no getting back into a work-force similar to the one left.
2. It is possible to find investments that are generous and can pay for one's lifestyle but they tend be risky...it therefore all depends on one's attitude to risk. If anyone is averse to risk, and prefers to sleep soundly at night, then a diversified retirement portfolio is the answer.
3. Living in a tropical paradise, on the cheap, is a dream and rarely a reality...sods law says something will go wrong...that is a given and should be in one's alternative plan. i.e. Richard Branson's ritzy Necker Island paradise is now in ruins.
I have to say, I didn't follow my own rules and have some regrets, but I always look on the bright side and lie to myself....:D
Mark
ronb wroteThen of those interest rates here, currently under 7%, a withholding tax of 20% is taken from your earnings.
True, but if you file your tax return annually you can claim a refund if your income results in an overall tax rate of less than 20%. For example, let's say that you earn 100 juta of interest on your deposits in a given year and that this is your only worldwide income. The bank takes 20 juta as a withholding, however under the tax rates your actual liability is only 5%, or 2.5 juta, on the first 50 juta of income, plus 15%, or 7.5 juta, on the next 50. Total actual liability then is 10 juta or 10% of your income, meaning a refund of 10 juta is owed. That is, of course, if you have an NPWP (tax number) as all persons spending more than 183 days in Indonesia in any 12 month period are required to have.
Mark
Lots of expats come to Bali to escape from a life filled with rules and regulations, including paying income tax. However, given Indonesia's dire need for government revenues and pitifully low tax collection rate, it's only a matter of time before the tax noose tightens. It will not target expats as such, but will rather catch them up in an overall push to achieve higher tax collection rates from all residents. This is absolutely correct and the right thing to do. If people leave because they don't want to pay lawful tax, then so be it.
davita
I agree the future may not be the same as the past...it never is.
This subject was hotly debated on another forum...
https://forum.expatindo.org/threads/retired-expat-no-indonesian-income-do-they-need-npwp.2400/
where many, on retirement visas, said they tried to get an NPWP so they could file for taxes and were rejected....Indonesia makes rules then conveniently breaks them.
davita
My understanding is the 20% withholding on bank interest was for non-residents. If resident, with an NPWP, I thought only 15% was withheld, but not sure.
Also, imo the inflation index is measured for Indonesian lifestyles. If there was a measurement for expats I believe that index would be much higher as many of the items, deemed necessary for expats, are taxed higher and generally cost more.
The law does state all those staying in RI more than 183 days, or those with an intent...ie holding Kitas/Kitap, are eligible to be taxed on world-wide earnings...but the practice is different. Many expats, who are not working, or doing business, but live in RI, do not have an NPWP and nobody bothers them ...it's been like that for years.
The day they apply the law to everyone is the day there could be a mass exodus. My own plan B is Malaysia where they only tax (MM2H) expats on income derived from Malaysia.
davita
Mark wroteLots of expats come to Bali to escape from a life filled with rules and regulations, including paying income tax. However, given Indonesia's dire need for government revenues and pitifully low tax collection rate, it's only a matter of time before the tax noose tightens. It will not target expats as such, but will rather catch them up in an overall push to achieve higher tax collection rates from all residents. This is absolutely correct and the right thing to do. If people leave because they don't want to pay lawful tax, then so be it.
You're making it sound like expats are using Indonesia as a tax free haven. I don't know anyone that does that. People I know, and myself, pay taxes on income generated outside of RI, in other jurisdictions.
The rule Indonesia applies is very similar to other countries where income is taxed according to residency rules and double-taxing is avoided due to tax treaties. But other countries have efficient tax services which Indonesia doesn't. The RI bureaucracy to apply the rules would likely be non-productive as most expats probably pay more tax, where the income [B]is[/B] taxed, than would additionally be owed to Indonesia. For the RI tax office it would be a paper exercise with no revenue...and probably why they don't apply the law rigorously.
You are correct that Indonesia does need to increase its tax efficiency but they have enough issues trying to squeeze taxes from citizens....so singling non-working expats, imo, would be counter-productive
Mark
Well, I don't know of any non-working expats resident in Indonesia who properly file accurate tax returns in Indonesia, so in effect they are using Indonesia as a tax haven. I'm sure there are some who comply, but probably very few. Whether they are paying taxes in their home countries depends. For example, in Singapore there is no taxes on dividends, interest and capital gains. So a Singapore citizen living in Indonesia could effectively pay no tax on their investment income by simply not declaring their worldwide income as required by Indonesian law. You are right that some countries have double taxation treaties with Indonesia and these would apply where applicable, but it does not mean that an expat can simply ignore their residency of Indonesia and not file a tax return. Anyway, as I said the noose will tighten. There is already going to be information sharing under an OECD agreement, so Indonesia will find out how much money its residents are earning abroad. In addition, I can imagine that eventually Kitas and Kitap holders will be required to have NPWP and show proof of tax filing to get their passes renewed. As for those 'living' in Indonesia on social visit passes, that is another issue that will eventually be addressed as countries are slowly eliminating this stealth way of obtaining residency. Sorry to the anarchists who came to Bali to escape the rules of their home countries, but Indonesia will be changing...
