19 Jan 2017
Foreign Taxable Income After Tax Amnesty
We are proud of our Tax Amnesty Program. It is considered as the most successful in the Globe. As we understand, Tax Amnesty participants have disclosed not only domestic assets but also foreign assets.
For those who have disclosed foreign productive assets, they should be aware that income earned from offshore might be subject to tax in Indonesia in the year 2016 onward.
As long as the Indonesian tax laws still use worldwide income base, then the tax payers should make sure if any tax liabilities on income earned outside of this country. Offshore taxable income can be in the form of active or passive income. Checking at the tax treaties or local tax laws/regulations is recommended for this issue.
For example, as we understand many Indonesian people invest and put their fund in time deposit at Singapore’s banks. By Singapore tax law, interest on time deposit at bank in Singapore is free of tax.
Based on article 11 of Indonesia – Singapore tax treaty, interest arising in Singapore may be taxed in Indonesia. So it may be considered as taxable income and subject to tax in Indonesia.
Knowing the International tax regulations will help to enhance tax compliance and also avoid the tax risk in the future.
Agung Tjahjady SH, CPA, MM, BKP
Registered Tax Consultant, Advocate