Tax implications for Digital Nomads in Indonesia

Indonesia is among the 100 global favorite destinations for workcation or Digital Nomads. According to the Laporan Nusantara report of July 2022, which refers to a survey carried out by the Nomadlist, there are three regions in Bali ranking among the top 100 destinations for Digital Nomads in the world as stated in the table below. This is directly related to essential aspects like affordable living costs, great choice of tourist destinations and a high safety index.

At a glance

No.	Destination	Score
1	Warsaw, Poland	4.89
2	Gran Canaria, Canary Islands	4.89
3	Da Nang, Vietnam	4.82
4	Lisbon, Portugal	4.81
5	Belgrade, Serbia	4.76
11	Saseh, Bali, Indonesia	4.64
40	Ubud, Bali, Indonesia	4.29
71	Seminyak, Bali, Indonesia	4.14

Source : Nomadlist, as stated in Laporan Nusantara of July 2022.

The Minister of Tourism and Creative Economy (“MTCE”), Sandiaga Uno, reported that from January to August 2022, 3,017 tourists used socio-cultural tourism destinations for digital nomadism. According to the Study of the MTCE, the Canggu area in Bali is the region with the largest number of digital nomads in the province.

Visa: Check! - But what about tax?

In terms of visa, Digital Nomadism can now be facilitated by using a socio-cultural destination visa (B-211) which is eligible for all countries. The visa is valid for 60 days and can be extended up to a maximum stay of 180 days or six months.

As to taxation, though, there have been no specific regulations issued to respond to the trend of Digital Nomadism.

Resident or non-resident?

Based on the prevailing Income Tax Law, individuals who are regarded as resident taxpayers are either Indonesian citizens or foreigners who are (a) residing in Indonesia; (b) present in Indonesia for more than 183 days within a period of 12-months, either continuously or intermittently; or (c) present in Indonesia during a fiscal year with the intention to reside in Indonesia.

Having the intention to reside in Indonesia can be proven by documents such as (a) Permanent Stay Permit Card (KITAP); (b) Limited Stay Visa (VITAS) with a validity period of more than 183 days; (c) Limited Stay Permit (ITAS) with a validity period of more than 183 days; (d) a contract or agreement to carry out work, business, or other activities carried out in Indonesia for more than 183 days; or (e) other documents that may indicate the intention to reside in Indonesia, such as a rental contract for a residence for more than 183 days or documents substantiating the transfer of a family member.

Referring to the above, Digital Nomads staying in Indonesia for not more than 183 days within a period of 12-months are regarded as non-resident taxpayers. Whilst Digital Nomads who stay in Indonesia for more than 183 days within 12-months meet the requirement as resident taxpayers in Indonesia.

Being a non-resident taxpayer, Digital Nomads will only be taxed in Indonesia on income sourced from Indonesia, while resident taxpayers will be taxed on their worldwide income.