Can anyone explain the purchase process in Bali???

[DAROB]

Thanks Fred2...I agree some things are done in Indonesia, even if against the law, and nobody cares. I just think it prudent that we advise, on the forum, according to law....and then others can accept or reject that caveat.
I 'own' two properties (an apartment in Jakarta and a villa in Bali) and was advised, by a lawyer, to defer from getting a legal document to say I lent the money as it might be construed I'm in the business of money-lending. Maybe just having one would fly under the radar.
My question about court cases really refer to any that the government has seen fit to charge to prove that a 'nominee owning HM property' is illegal. I already conceded there's been many civil disputes between foreigners and their nominees...but that is another matter.

If you enjoy work and getting paid well 'good on ya'. I've been retired since 1990, never worked harder and not been paid a cent....but enjoyed every minute....

davita, you indicate that you did not make a legal document to say that you lent the money for the asset purchase - so that you would not be construed as being in the money-lending business. However, in the absence of some kind of loan, how can the nominee explain the source of funds for the aseet purchase - if / when the tax office comes calling? Are you suggesting that the nominee should not report the asset in their SPT tax return? On the basis that the nominee did not actually fund the asset purchase and also does not actually own the asset?

 

[tel522]

Im afraid davita has unfortunately passed away.

 

[DAROB]

Im afraid davita has unfortunately passed away.

So sorry, did not know.

 

[spicyayam]

davita, you indicate that you did not make a legal document to say that you lent the money for the asset purchase - so that you would not be construed as being in the money-lending business. However, in the absence of some kind of loan, how can the nominee explain the source of funds for the aseet purchase - if / when the tax office comes calling? Are you suggesting that the nominee should not report the asset in their SPT tax return? On the basis that the nominee did not actually fund the asset purchase and also does not actually own the asset?

If you are going down the nominee route then I would suggest having them report the asset to the tax office. I am no expert but I believe the asset is treated as income for the nominee and tax required to paid. All property transactions are reported to the tax office so there is no way of escaping this.

 

[DAROB]

If you are going down the nominee route then I would suggest having them report the asset to the tax office. I am no expert but I believe the asset is treated as income for the nominee and tax required to paid. All property transactions are reported to the tax office so there is no way of escaping this.

Thank you spicyayam, I do agree that it is wise to comply with the tax laws and report the asset to the tax office. However, I was not aware that the tax office would automatically classify the asset value as income - I had envisaged that the nominee would simultaneously report a balancing loan equal to the asset value. So I guess my original question was poorly constructed - I am mainly interested in the 'type' of loan that is appropriate and would be acceptable to the tax office. In my particular case, there is absolutely no need to tie the loan to the asset - I do not need any side-agreements saying that I have rights to lease or use the asset in any way. It is a parcel of land in Java which the nominee and myself plan to sell on in a couple of years. I absolutely trust my nominee and I am just helping them out with their investment by loaning them money for the purchase. So I am asking what is the simplest 'type' of loan agreement that will be acceptable to the tax office, and whether that loan agreement requires a 'legal document' (hence my reference to this in my original question to davita).

 

[spicyayam]

I had envisaged that the nominee would simultaneously report a balancing loan equal to the asset value.

I am not sure how that would work. This started with the tax amnesty. I can only suggest going to the tax office yourself or asking a friend to go in with a list of questions you want to be answered.

However, in the absence of some kind of loan, how can the nominee explain the source of funds for the aseet purchase - if / when the tax office comes calling? Are you suggesting that the nominee should not report the asset in their SPT tax return? On the basis that the nominee did not actually fund the asset purchase and also does not actually own the asset?

At least from what I have seen, it seems the tax office doesn't have a problem if the nominee says they are just a nominee and the property was purchased by a foreigner, but as with any tax official they want to get paid.

I know of some locals who have a bunch of properties in their name both their own properties and using a nominee structure and they received letters from the tax office and have so far avoided visits from the office. What the next step is, I don't know.

 

[DAROB]

I am not sure how that would work. This started with the tax amnesty. I can only suggest going to the tax office yourself or asking a friend to go in with a list of questions you want to be answered.



At least from what I have seen, it seems the tax office doesn't have a problem if the nominee says they are just a nominee and the property was purchased by a foreigner, but as with any tax official they want to get paid.

I know of some locals who have a bunch of properties in their name both their own properties and using a nominee structure and they received letters from the tax office and have so far avoided visits from the office. What the next step is, I don't know.

Thanks for your input and suggestions spicyayam - much appreciated. I will try and seek input from a reliable tax consultant before facing the tax office directly. Of course, as with so many other aspects of life here, it is not easy to meet 'reliable' people! If you - or anyone else on this forum - is able to recommend a tax consultant in Bali or Jakarta that would be superb. I will of course eventually revert and inform the forum about how I get on with this issue.

 

[spicyayam]

As far as I am aware you can go to the tax office and ask questions without having to give away specifics. I also wouldn't rely too much on a consultant's advice.

 

[DAROB]

As far as I am aware you can go to the tax office and ask questions without having to give away specifics. I also wouldn't rely too much on a consultant's advice.

Thank you so much for this spicyayam, very helpful information.

 

[Kimmarie]

it is under a nominee set up

How did the transaction go? I'd love to hear