Income tax on Aussie pension in Indonesia

masuk

I am considering retiring to Bali in the new year, and doing as much reading as possible. I came across this snippet of information, and wondered if the advice is still current:- trying to get info on this: [B]Indonesian Income Tax for Retirees[/B] [I]Be advised that even on a retirement visa, you will be liable to pay Indonesian personal income tax, taxed at the rate of 35% for incomes over Rp 200 million/year.[/I]

davita

Hi masuk and welcome to the forum. Indonesian law states all residents are taxed in Indonesia on their world income yet they don't seem to be bothered about those on a retirement Kitas/Kitap. Those on a work visa are taxed. I've been on a retirement Kitap for years and never submitted an NPWP (Tax Form)..... and I know many others in the same boat. I also know some who applied for an NPWP but were denied as they were on a Retirement Kitas/Kitap. They do withhold 20% from any bank interest and that seems to be sufficient. Who knows what will happen if they suddenly demand tax from an overseas old age pension or savings....I would leave. Malaysian MM2H holders are NOT taxed on any earnings outside of Malaysia.

masuk

Selamat sore davita. Thanks for the information. a tax on my pension would be a real killer! Same here in Thailand. No tax on pensions.

ronb

There is a bilateral tax agreement between Indonesia and Australia. If your relationship with Aussie tax office is in order and you are not earning in Indonesia, then all is ok.

davita

Ronb.... I understand the bi-lateral agreement means you are not taxed twice on the same income but, under Australian tax rules, does it mean you pay tax on an Australian pension, even if you are not a resident of Australia, but reside elsewhere?

masuk

Thanks RonB. One less hurdle!!! In regard to davita's question, I've been on an Aussie pension for 5 years in Thailand. While we do not get the supplements for power, etc, we also do not pay tax.

Mark

Right now and for the foreseeable future the authorities are going to have much bigger fish to fry from a tax perspective. However, as the OECD agreement on trans-boundary financial reporting comes into effect next year (Australia is a signatory), the Indo authorities will automatically be informed of the existence of overseas source income by expats residing in Indonesia. If and when they take action on this information is anyone's guess...

davita

I wonder how this OECD Common Reporting System (CRS) will actually work. I really cannot fathom that all Australian/UK retiree pension reports will be sent out weekly/monthly to every country that a retiree resides. The workload will be enormous. I can understand if any country wishes to review some resident then the pension information may no longer be private and can be accessed. Anyone know how it will be processed when introduced next year.

Mark

Don't have the details but there is huge international support for this initiative, so it will happen...

davita

Don't have the details but there is huge international support for this initiative, so it will happen...

I searched and found some interesting info from my HSBC bank.......http://www.crs.hsbc.com/ It's interesting that Philippines and Thailand are not signators....maybe moving there could be plan B.:D

Mark

I searched and found some interesting info from my HSBC bank.......http://www.crs.hsbc.com/ It's interesting that Philippines and Thailand are not signators....maybe moving there could be plan B.:D

There will probably always be places in the world to escape to if one wants to avoid tax. As for Thailand and the Philippines, I imagine they will come under extreme pressure from the powerful OECD countries to join the info sharing arrangement so it's not a question of if but when.

davita

Mark wroteThere will probably always be places in the world to escape to if one wants to avoid tax. As for Thailand and the Philippines, I imagine they will come under extreme pressure from the powerful OECD countries to join the info sharing arrangement so it's not a question of if but when.

Under Malaysia's MM2H visa you become resident Malaysia but they don't tax on any offshore income....and that's perfectly legal. I went to Panama some years ago and they have a similar retiree program.

davita

Thanks RonB. One less hurdle!!! In regard to davita's question, I've been on an Aussie pension for 5 years in Thailand. While we do not get the supplements for power, etc, we also do not pay tax.

In which case masuk...legally, you will be taxed on your pension by Indonesian tax authority if you are resident Indonesia as the bi-lateral agreement only reduces the tax by any amount you would have paid in Australia. As you don't pay anything there it will be fully taxed in RI. However, as I said in post #2, I don't know anyone on a retirement Kitas/Kitap that files for taxes in Indonesia unless they are earning in Indonesia......but the rule is quite clear.....http://www.expat.or.id/info/individualincometaxes.html

Mark

davita wroteUnder Malaysia's MM2H visa you become resident Malaysia but they don't tax on any offshore income....and that's perfectly legal. I went to Panama some years ago and they have a similar retiree program.

True, and it is the same in the Philippines. However, Thailand is like Indonesia and taxes residents on worldwide income.

masuk

Well, I've been on a retirement extension to my visa in Thailand for a few years, and income and taxation have never been mentioned. The average Thai salary is so pathetically low, that I couldn't see much tax being raised on incomes, apart from us foreigners. 30 baht (about $US90cents) per hour is the normal rate, and the working week is 6 days. There must be money somewhere though, as every 2nd person has an iphone!