The Omnibus Law brings changes to the definition of a Tax Subject. Before the Omnibus Law came into effect in November 2020, a Tax Subject individual is one who stays in Indonesia for more than 183 days within a period of 12 months. To clarify existing uncertainty, the Ministry of Finance Regulation No. 18/PMK.03/2021 (“PMK-18”) issued on February 17, 2021 provides additional requirements and procedures.
1. Clarification on Criteria for Domestic Tax Subjects
An individual is a Domestic Tax Subject if they are residing in Indonesia, present in Indonesia for more than 183 days within a 12-month period, or have an intention to stay in Indonesia. PMK-18 further elaborates as follows:
- The definition of “residing in Indonesia” is based on whether the individual
- Lives in a place in Indonesia that is at their disposal or can be accessed at all times, either owned, rented, or available to be used by the individual, and not merely a place of transit;
- Has their center of vital interests in Indonesia; or
- Has their habitual abode in Indonesia, meaning a place to carry out hobbies or activities.
- Present in Indonesia for more than 183 days within a 12-month period can be counted either continuously or intermittently, with part of day counting as 1 (one) day.
- An “intention to stay in Indonesia” can be substantiated by documents such as:
- A Permanent Stay Permit (Kartu Izin Tinggal Tetap (KITAP));
- A Limited Stay Visa (Visa Tinggal Terbatas (VITAS) with more than 183 days validity;
- A Limited Stay Permit (Izin Tinggal Terbatas (ITAS) with more than 183 days validity;
- An employment agreement with a period of more than 183 days; or
- Other supporting documents to prove the intention to stay in Indonesia, such as a rental agreement of more than 183 days, or mobilizing family members to live in Indonesia.
2. Foreign Tax Subject
An individual will become Foreign Tax Subject, if:
- The individual does not reside in Indonesia;
- The Foreign Citizen (Warga Negara Asing (WNA)) has not been present in Indonesia for more than 183 days within a 12-month period; or
- The Domestic Citizen (Warga Negara Indonesia (WNI)) has been outside of Indonesia for more than 183 days within a 12-month period, and fulfills the below requirements.
The requirements that WNI must fulfill are as follows:
- Subject to a tie-breaker rule based on the location of permanent place, center of vital interests, and habitual abode, which are analyzed on a tiered basis, as shown below:
- To fulfil the criteria as a Foreign Tax Resident (SPLN), the individual must:
- Be registered as a tax resident in that foreign jurisdiction (proven by a Certificate of Domicile); and
- Obtain a Certificate of WNI that fulfills the criteria as an SPLN from the Director General of Taxation.
For more information related to Indonesia’s Omnibus Law, please contact your Tricor representative.