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Do you know which expatriation tax provisions to apply to your foreign employees?

​Tax is an obligation for all citizens that earn an income in Indonesia. There is no exception for foreign nationals as long as their activity has economic value, it is subject to Indonesian income tax (Pajak Penghasilan-PPh). The government occasionally updates some regulations and employers, as sponsor companies, must be aware if their expatriate employees have paid the correct tax law.

Categories of Tax Subjects in Indonesia

Domestic Tax Subjects

Foreign nationals are categorised as domestic taxpayers and subjected to Article (PPh) 21 if they are:

  • an individual residing in Indonesia

  • an individual residing in Indonesia for more than 183 days within 12 months, or

  • an individual who in a tax year resides in Indonesia and has the intention to reside

This definition is based on Article 1 Regulation of the Director General of Taxes Number PER-2/PJ/2009.Taxpayers are obliged to pay tax when their income exceeds the minimum wage and they must have a tax ID (NPWP).

Foreign Tax Subjects

Foreign nationals that are categorised as foreign taxpayers and subject to Article (PPh) 26 or Tax Treaty are:

  • individuals who do not reside in Indonesia, or

  • individuals who are present in Indonesia for not more than 183 days within a period of 12 months who earn income from Indonesia.

Foreign tax subjects are not obliged to have a tax ID (NPWP) and settle their tax payment in Annual Individual Income Tax Return (Surat Pemberitahuan - SPT).


Foreign nationals are not categorised as taxpayers if they reside in Indonesia for less than 183 days and do not receive any income in Indonesia. Also, expatriates who are included in Article of Law Number 36 of 2008 are not subject to tax, such as:

  • representative office

  • a diplomate

  • a representative of foreign countries, Etc.

How JAC Outsourcing can support your tax process in Indonesia

JAC Outsourcing offers comprehensive tax services to support your business growth in Indonesia. Our solution-driven approach will furnish your strategy with insights and efficiencies to reduce costs and mitigate risks. Utilising tax outsourcing will augment your company with valuable resources and experts without increasing overhead costs.

JAC Outsourcing is a specialist company that provides tax, accounting, payroll, and employer without establishment (EWE) services. We have over 20 years of experience providing services to businesses of varying scales with complex issues and successfully solving compliance challenges. Our expert consultants stay updated with the latest regulations to ensure clients have an accurate tax report that meets your business requirements.

Discuss with our tax experts