All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Indonesia: Clearer tax residency criteria


On December 28 2011, the Indonesian Directorate General of Taxes (DGT) issued Regulation No. PER-43/PJ/2011 setting out the new criteria for determining tax residency.

This regulation has been long awaited since the previous criteria for tax residency were too general and was a constant source of conflict in interpretations between the taxpayers and the DGT.

For individual taxpayers

The income tax law sets out that an individual qualifies as a resident taxpayer if:

  • The individual has a place of residence in Indonesia. The term "place of residence" means a place that is being used by the individual for his/her permanent dwelling or to perform the ordinary course of life or habitual abode; or

  • The individual is present in Indonesia for more than 183 days within a period of 12 months; or

  • The individual is present in Indonesia and has the intention to have a place of residence in Indonesia. The intention is shown when the individual obtains a working visa, stay permit or a contract to carry on employment or activities in Indonesia for more than 183 days, or when the individual moves his/her place of residence to Indonesia.

The regulation also provides that an Indonesian citizen who leaves Indonesia for more than 183 days within a period of 12 months shall be considered as a non-resident taxpayer. However, the individual must have a proof that he/she has a place of residence outside of Indonesia in the form of ID/student card, certification of residence issued by the Indonesian embassy overseas or as explicitly stated in the passport. An Indonesian citizen who moves abroad may still be considered as a resident of Indonesia as long as the said individual is constantly moving from one place to another and is present in Indonesia for more than 183 days within a 12 months period.

For legal entities

The regulation also provides the following criteria in determining whether a legal entity qualifies as a tax resident through its establishment/registration or its place of domicile situated in Indonesia.

A legal entity is considered to be established/registered in Indonesia if its establishment/registration is based on the Indonesian laws or takes place in Indonesia.

A legal entity is considered to have its place of domicile in Indonesia if it meets any of the following criteria:

  • It is written in the act of establishment that the domicile of the said legal entity is in Indonesia;

  • It has a head office in Indonesia;

  • It has an administrative and/or financial headquarter in Indonesia;

  • It has a place available in Indonesia for management to control the company or to hold meeting in making strategic decisions; or

  • Its management members reside or are domiciled in Indonesia.

A foreign entity that carries on business or activities in Indonesia through a place of management in Indonesia is still considered as a permanent establishment provided that the place of management is used only to conduct routine or day-to-day activities and not to control all matters of the enterprise nor to make strategic decisions.

This regulation is important for multinational companies or foreign individuals conducting business or activities in Indonesia since the Indonesian tax law requires a resident taxpayer to register and to obtain a taxpayer identification number, to maintain bookkeeping, to prepare and submit tax returns, and to fulfill other administrative tax obligations. As Indonesia also applies the worldwide income concept, all resident taxpayers must report their worldwide income, which will be taxed accordingly in Indonesia.

Andy Kuswandi ( & Jul Seventa Tarigan (

PB Taxand


More from across our site

The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
This week the Biden administration has run into opposition over a proposal for a federal gas tax holiday, while the European Parliament has approved a plan for an EU carbon border mechanism.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree