We know that taxes are mandatory for every citizen, including foreign nationals who work and earn income in a country other than their origin. We ourselves have the Indonesia tax rate for foreigner that foreign citizens must know before they decide to work in Indonesia and earn income.
The provisions for taxpayers for foreign nationals themselves have been stipulated in the Manpower Act which states that everyone who receives income must be subject to income tax, including foreign nationals who work and earn income. They will be subject to PPh 26 if they work in Indonesia.
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Some Differences in Indonesia’s Tax Rate for Foreigners with Different Types of Foreign Citizens Who Earn Here
We know that foreign workers will be subject to the Indonesian tax rate for foreigners with the type of PPh 26 or PPh 21. These two types of taxes for foreign nationals have their own differences, if your office employs foreign employees in the long term, then they will be subject to income tax. 21. So, what is the difference with PPh 26 for foreigners?
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Definition and Explanation of the Definition of PPh 26
According to Law no. 26 of 2008, PPh 26 is an income tax withheld from a business entity that makes payment transactions in the form of salaries, interest, and royalties to foreign taxpayers. The things that determine whether a foreign citizen gets a withholding of PPh 26 tax from their income are explained as follows:
- The Indonesian tax rate for foreigner with the type of PPh 26 is imposed on individuals who reside in Indonesia for no more than 183 days a year and companies that are not established or located in Indonesia by operating their business through a Permanent Establishment (BUT).
- Individuals who do not reside in Indonesia, individuals who stay in Indonesia for no more than 183 days a year, and companies that are not established or located in Indonesia and earn income from Indonesia not through a Permanent Establishment in Indonesia.
Understanding and Explanation of PPh 21
For this type of Indonesia, the tax rate for foreigners is imposed if they earn income originating from Indonesia which is paid through BUT (Permanent Forms of Business) in Indonesia and they get income which has exceeded the Non-Taxable Income, which is Rp. 54,000,000. – and must be subject to PPh 21 tax.
For more details as follows:
- Individuals who reside in Indonesia or stay in Indonesia for more than 183 days in a year or within a tax year are in Indonesia and have the intention to reside in Indonesia.
- An agency established or domiciled in Indonesia and employing foreign employees who have been living in Indonesia for a long time.
By Knowing Indonesia Tax Rate for Foreigner, Then You Will Avoid Double Taxation For Foreign Workers
If you have foreign workers employed in your company, then as a good business owner you must understand the Indonesian tax rate for foreigners so that your workers do not experience double taxation which of course will burden them when they have to work in Indonesia and end up getting nothing from the results of their work. hard they are here.
Foreign Tax Subjects (SPLN) and Domestic Tax Subjects (SPDN) themselves have their own differences which are included in PPh 26 or PPh 21. You must know the difference in this one thing so that later you will not experience difficulties when foreign workers work in your company and have to take care of the taxes they get. Tax Rate for Foreign Workers What Company Owners Should Know.
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Indeed, basically, workers have the right to have a decent and humanized life through the wage policy that was given before the Indonesian tax rate for foreigners was imposed. They are required to receive payment of wages as a basis for calculating or paying other rights and obligations that are not included in income tax.
Foreign citizens who work and earn income in Indonesia and are included in the Foreign Tax Subject (SPLN) will be subject to PPh 26 of 20% of the gross amount by the party who will later pay their income. So, you company owners must know more clearly about this so that foreigners feel comfortable.
Are You Confused in Determining the Indonesia Tax Rate for Foreigner for Foreign Workers Working in Your Company? No need to worry!
Perhaps most of the company owners will feel confused and bothered by the Indonesian tax rate for foreigners that must be given to foreign workers. However, you don’t have to worry and be confused! We from Proconsultofficial.com as a service consultant are here to make it easier for you to take care of taxes for foreign workers in your company!
Of course, we always provide the best service for those of you who want to take care of taxes and seek the best consultation regarding the management of an Indonesian tax rate for foreigners that is suitable and safe for companies. Contact us immediately and visit our web page at Proconsultofficial.com and get the best tax consultant services for your company.
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