Indonesia tax – who is resident? Tax office provides clarification

The Tax Office issued Regulation PER-43/PJ/2011 dated 28 December 2011 which provides clarification on the determination of tax residency, as described below.


An individual is treated as being a tax resident of Indonesia if he meets any of the following:

  • The person resides or is domiciled in Indonesia. This means that the person has a place of residence in Indonesia that is used as a permanent dwelling place, where  he carries on his “ordinary course of life” or his “place of habitual abode”. Ordinary course of life refers to the carrying on of daily work, private, social or community activities in Indonesia. The place of habitual abode refers to a place that is used for the person’s usual activities or hobbies, whether routine or infrequent.
  • The person is present in Indonesia for more than 183 days in a 12-month period. The stay can be continuous or broken up, and part-days are to be counted as 1 full day.
  • The person stays and intends to reside in Indonesia. The intention can be evidenced by a work visa, a limited stay permit card (KITAS) or a contract of employment/ business/ other activities that are performed in Indonesia for more than 183 days. The leasing of a place of residence or the relocation of his family to Indonesia would also indicate this intention.

If the conditions above are met, the individual will be treated as being resident in Indonesia. An Indonesian citizen who is resident abroad will be treated as an Indonesian tax resident unless he has valid official documentation proving that he is tax resident abroad, such as a green card, identity card, student card or other verifications by the Indonesian foreign embassies.


A company is treated as being a tax resident of Indonesia if the following conditions are met:

  • It is incorporated in Indonesia;
  • Its head office, centre of administration or finance is in Indonesia;
  • Its management resides in Indonesia; or
  • Board meetings at which strategic decisions are made are held in Indonesia.

A foreign company that is not established or domiciled in Indonesia but conducts business activities in Indonesia will be treated as being resident in Indonesia only where strategic decisions of the company are made in Indonesia.

The Regulation also provides that the “place of effective management” rule in Indonesia’s tax treaties refers to the place where significant management and commercial decisions are made, or where the management makes decisions for the well-being of the company.

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