When Does a Foreign National Become a Tax Resident?

INDIVIDUALS categorised as tax residents are not limited to Indonesian citizens (warga negara Indonesia/WNI in Indonesian). Under the applicable provisions, foreign nationals (warga negara asing/WNA in Indonesian) may also be designated as tax residents if they fulfil certain criteria.

Referring to Article 2 paragraph (3) subparagraph a of the Income Tax Law (ITL), an individual, whether an Indonesian citizen or foreign national, is categorised as a tax resident if they fulfil one of the following 3 criteria:

1. having a place of residence in Indonesia;
2. present in Indonesia for more than 183 days within a 12-month period; or
3. within a tax year, is present in Indonesia and intending to reside in Indonesia.

As such, what indicators are used to determine whether a foreign national is categorised as a tax resident?

Details of these indicators are set out in Minister of Finance Regulation (MoF Reg.) 18/2021, as amended by MoF Reg. 81/2024 and the Director General of Taxes Regulation No. PER-23/PJ/2025. The indicators are set out below.

1. Residing in Indonesia

Referring to Article 4 paragraph (1) of PER-23/PJ/2025, an individual (including a foreign national) is deemed to reside in Indonesia if they:

1. has a permanent dwelling place in Indonesia that:

• is used or may be used at any time;
• is owned, rented or available for use; and
• does not constitute a place of transit for the individual.

1. has a centre of vital interests in Indonesia that is used by the individual as the centre of personal, social, economic and/or financial activities or affairs in Indonesia; or
2. carries on the ordinary course of life in Indonesia, including activities that constitute pastimes or hobbies.

2. Present in Indonesia for more than 183 days within a 12-month period

Referring to Article 4 paragraph (2) of PER-23/PJ/2025, the 183-day period is determined by calculating the duration an individual tax subject is in Indonesia within any 12-month period. The 12-month period may be either continuous or interrupted, and a fraction of a day is treated as 1 (one) full day.

An individual's presence in Indonesia for more than 183 days need not be consecutive; it is determined by the total number of days the individual is present in Indonesia within a 12-month period from the date of their arrival in Indonesia.

For example, Mr Andrew is a foreign national entrepreneur operating in the furniture industry. To expand the market share of his products, Mr Andrew visits Indonesia several times to study the market and to prepare for the opening of several outlets in Indonesia.

For clarity, the following details relate to Mr Andrew's visits to Indonesia during the period from 2023 to 2024:

Based on the information from the table above, Mr Andrew is present in Indonesia for 184 days within a 12-month period. Accordingly, Mr Andrew qualifies as a tax resident, as he is present in Indonesia for more than 183 days within a 12-month period.

Further, an individual who is present in Indonesia for more than 183 days within a 12-month period is an individual who is physically present in the territory of Indonesia at a given time based on actual circumstances.

3. Within a tax year, present in Indonesia and intending to reside in Indonesia

Referring to Article 4 paragraph (3) of PER-23/PJ/2025, an individual (including a foreign national) deemed to have the intention to reside in Indonesia may be proven by documents in the form of:

1. a permanent stay permit card (Kartu Izin Tinggal Tetap/KITAP in Indonesian);
2. a limited stay visa (Visa Tinggal Terbatas/VITAS in Indonesian) with a validity period of more than 183 days;
3. a limited stay permit (Izin Tinggal Terbatas/ITAS n Indonesian) with a validity period of more than 183 days;
4. a contract or agreement to conduct work, business or activities conducted in Indonesia for more than 183 days; or
5. other documents that can indicate the intention to reside in Indonesia, such as a residential rental contract for more than 183 days or documents that indicate the transfer of family members.

Further, a foreign national who is a tax resident becomes a resident taxpayer (wajib pajak dalam negeri/WPDN in Indonesian) upon receiving or accruing income. Such income may originate from within or outside Indonesia, provided the amount of income exceeds the personal tax relief (penghasilan tidak kena pajak/PTKP in Indonesian).

However, foreign nationals who are tax residents with certain expertise may be eligible for an incentive whereby income tax is levied only on income sourced from Indonesia (territorial basis). This provision applies provided that the foreign national possesses certain expertise and is valid for 4 tax years calculated from the date the foreign national becomes a tax resident. See ‘Foreign Income of Foreign National Tax Residents May Be Tax-Exempt’.