taxes for Australians living in Bali

Taxes for Australians living in Bali

Tuesday, August 27, 2019 by

If you’re an Aussie expat living in Bali, you may be well aware of the fact that taxes for Australians living in Bali and your tax obligations generally, are a little complex.

Indeed, many expats mistakenly believe that they are exempt from Indonesian taxes or end up confused about payment deadlines. If you’re looking for a little guidance about your tax requirements as an Australian expat in Indonesia, we’ve put together some top tips to help you remain compliant.

Understand the difference between corporate and personal income tax

Foreign companies that are permanently based in Indonesia are liable to pay a corporate income tax rate of 25%. The personal income tax for an Aussie expat in the country is usually between 5% and 30%, and any income received by non-tax residents is subject to a 20% withholding tax.

Corporate income tax

Any Australians running companies within Indonesia must pay corporate income tax. The amount they have to pay will vary depending on business activities. In this way, it is important that expats keep stringent records of their finances and, in most cases, it is advisable that they hire a third party to take care of complex corporate tax issues.

Personal income tax

Aussie expats that fall within the category of Indonesian tax residents are required to pay personal income tax on their worldwide income (i.e. all income that they earn from all sources including all income generated outside of Indonesia). For an Australian to be considered a tax resident, they must be present in Bali (well, technically Indonesia actually) for at least 183 days of a 12-month time frame.

Non-tax residents that stay in the country for fewer than 183 days of a 12-month period are only required to pay tax on income sourced from within Indonesia.

Exemptions

Some expats are exempt from paying personal income tax. These include foreign consular and diplomatic personnel, employees of foreign armed services, representatives of certain international organisations.

Other tax requirements for Aussie expats

As well as paying corporate and personal taxes, Aussie expats in Indonesia must put money towards certain social security schemes. These include the compulsory healthcare scheme and something known as the manpower scheme.

For more information on tax issues within Indonesia or anything else about expat tax returns in Australia, don’t hesitate to get in touch with our Expat Tax Services team today!

Shane Macfarlane
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Comments 8

  1. Hi, I’m looking at doing a 2 on 2 off roster on a mine in the Pilbara in Western Australia. I am wanting to reside in Bali rather than Australia on my 2 weeks off.
    Are there any tax benefits for me if were to do this or will it be cheaper for me to stay living in Australia?

    1. Post
      Author

      Hi Stephen,

      Based on your plans and that roster, you’ll likely remain an Australian tax resident for Australian taxation purposes, even where you live in Bali on your time off. So ultimately from a tax perspective, there’s not likely to be any tax benefits of doing so at all.

      You’d also have to consider the Indonesian tax obligations that you’d potentially face too as you could meet the criteria of being a tax resident of Indonesia if you are physically present in Indonesia for greater than 182 days in a 12 month period. If so, then potentially you may be required to pay income tax in Indonesia on your worldwide income (including your Australian income). Although you’d likely to be entitled to a tax credit in your Indonesian return for any tax paid in Australia, (and that credit should completely offset your Indonesian tax), you’d potentially have to file returns in both countries, and ultimately (as Australia’s tax rates are higher than Indonesia’s) you’ll continue to pay tax at Australia’s ridiculously high tax rates on all of your income.

      Thus, from a tax perspective, there’s no real benefit in your plan. From a living costs perspective there may be as the cost of living in Indonesia is certainly much cheaper than Australia, but there’s no tax benefit in doing so.

      Hopefully that helps.

      Regards

      Shane

  2. Hi Shane. Im looking at a Indonesia contract that will keep me in indo for 7months of the year, where i will pay Indonesia tax, the other 5 months will be spent in NZ and Australia where i own properties. What will i need to do to avoid paying Australian Tax? I have no bills, cars or any ties to either nz or Australia other than those properties.

    1. Post
      Author

      Hi Brett,

      Unfortunately it’s just too difficult to say at this stage because we don’t know enough about your circumstances. As such, I’d highly recommending getting in touch or booking an appointment so that we can run through your situation in detail. Having said that however, if you were born in Australia, and if you do not have any other citizenship or place that you call home (where you intend to reside indefinitely) then more than likely the situation you described about working in Indonesia for 7 months of the year, will likely result in you remaining as an Australian tax resident.

      The reason for this would be that you would most likely pass Australia’s domicile test of residency, which requires states that you will be a tax resident of Australia unless you have a permanent place of abode outside of Australia. Unfortunately with a stay of only 7 months in Indonesia, you won’t meet that ‘permanent’ criteria sadly.

      Thus, you would remain a tax resident of Australia most likely. To be sure though, and to understand how taxes will apply to your circumstances, we’d highly recommend booking in for a residency consultation with our team or with another specialist expatriate tax firm so that we (or they) can get to the bottom of this for you.

      Thanks

      Shane

  3. Hi Shane, I’m working for an Australian company as a sole trader under an ABN but living between Bali and Australia, (my husband is Balinese and I’m an Australian).
    I paid my tax in Australia as usual because I always go back and forth to Australia 2-3 times a year.
    I’ve been working for this company for over two years and wanted to changed from Independent Contractor to Empoyee. My work is done remotely. Is it possible for me to be an employee living between two countries ?
    Thanks in advance

    1. Hi Ann,

      Shane is busy working through reviewing returns for our upcoming lodgement deadlines so I am responding to your question for him.

      If the company who you are working for is happy to change your arrangement to an employee then that will be fine.

      Depending on whether you are an Australian tax resident or not will impact on whether your employer is required to withhold PAYG and pay SGC superannuation on your wages.

      I think it would be good to discuss with you in a bit more detail as there are a few important things to consider regarding your tax residency status and where you are performing the work. If you would like to discuss further please get in touch with our team.

      Regards

      Terryn

  4. Hi, I would like some advise on what my obligations are in terms of taxes and visa requirements. I am employed by an Australian company and work remotely, predominately travel between bali, australia, thailand, china, and other places.

    Thank you.

    1. Hi Helena,

      We would love to assist you with advise regarding your Australian tax obligations. Australian tax is unnecessarily complex so we would need to have a consultation with you to go through your circumstances. You can schedule an appointment through the appointment page on the website.

      Thanks

      Terryn

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