In interpreting tax regulation, there is no absolute black or absolute white. In regard to this matter, we assist client to apply tax ruling to the authority which shall be a tool to confirm whether a tax treatment has been in compliance with the prevailing regulation. In addition, we also assist client to assess whether client shall eligible to apply tax facility also for the application of tax facility itself.
Understanding Tax Ruling and Tax Facilities
Tax Ruling is official clarification or decision issued by the Indonesian tax authorities in response to specific queries or tax issues presented by taxpayers. These rulings provide legal certainty on how tax regulations apply to your particular situation, helping to avoid potential disputes in the future.
Tax Facilities, are incentives provided by the Indonesian government to encourage certain business activities, investments, or compliance with national economic policies. These may include tax holidays, reduced tax rates, exemptions, or other fiscal incentives designed to support your business growth.
Yes, as an investor, you are allowed to manage and oversee your investments. However, the Investor KITAS does not permit traditional employment for other companies; it only covers activities related to managing your investments.
No, you cannot apply for a KITAS upon arrival. The KITAS must be processed before entering Indonesia, and you will need an entry visa related to the KITAS (e.g., VITAS) to convert it into a KITAS upon arrival.
The duration varies depending on the complexity of the case and whether the parties agree on terms. On average, it can take 6 (six) months, or it will be faster if both parties have agreed on terms.
Why choose arbitration over traditional litigation?
Arbitration is often chosen for its confidentiality, flexibility in procedure, and the ability to select arbitrators with expertise in the subject matter of the dispute.
What types of disputes are suitable for arbitration in Indonesia?
Commercial disputes
What are the costs associated with arbitration in Indonesia?
It includes administrative expenses of the arbitral institution, arbitrators’ fees, legal fees, and other expenses related to the proceedings.
How to enforce arbitration awards to make it legally binding and force in Indonesia?
The arbitration awards shall be registered in Indonesian court maximum 30 (thirty) days after the award is issued, and then shall obtain a court approval.
Can the Indonesian arbitration awards be challenged or cancelled in Indonesian courts?
Yes, under certain circumstances.
What is the legal remedy if an arbitration award is cancelled by Indonesian court?
Filing an appeal to Indonesian Supreme Court.
What happens if one party refuses to participate in arbitration proceedings in Indonesia?
If one party refuses to participate in arbitration proceedings in Indonesia, the arbitral tribunal may proceed with the arbitration and make a decision based on the evidence and arguments presented by the participating party.
What is an Investor KITAS, and how is it different from a Work Permit KITAS?
The Investor KITAS allows foreign nationals who hold significant shares in an Indonesian company to live and manage their investment in Indonesia. Unlike the Work Permit KITAS, the Investor KITAS does not require a separate work permit (IMTA) as it focuses on investment management rather than employment.
What are the key legal regulations governing visas and stay permits in Indonesia?
The Indonesian Ministry of Law and Human Rights Regulation Number 22 of 2023 outlines the legal framework for all visas and stay permits.
Can I apply for a Work Permit KITAS if I work for a foreign company based outside of Indonesia?
No, a Work Permit KITAS requires sponsorship from a legally registered Indonesian company. Foreign companies based outside Indonesia cannot sponsor a KITAS unless they establish a legal presence in Indonesia, such as a PT PMA.
Can I convert a Single-Entry Business Visa or Multiple-Entry Business Visa to a KITAS?
No, you cannot convert a Single-Entry or Multiple-Entry Business Visa to a KITAS. KITAS applications must be initiated separately through your employer or investment sponsor and require different documentation and procedures.
What should I do if I need to renew my KITAS?
Renewals must be processed before your KITAS expires. We recommend starting the process well in advance to avoid overstaying penalties.
Can I bring my family with me on a Work Permit KITAS
Yes, you can bring immediate family members (spouse and children) under a Dependent KITAS. Your dependents will be issued a KITAS based on your work permit, allowing them to stay in Indonesia legally, though they cannot work.
Can I work in Indonesia with an Investor KITAS?
Yes, as an investor, you are allowed to manage and oversee your investments. However, the Investor KITAS does not permit traditional employment for other companies; it only covers activities related to managing your investments.
What happens if I overstay my visa or KITAS in Indonesia?
Overstaying your visa or KITAS can lead to fines of IDR 1 million per day, and if overstaying persists, deportation and potential blacklisting from Indonesia are possible. It’s important to ensure timely renewals and proper visa management.
How long does it take to process a Work Permit KITAS?
The processing time can vary, but typically it takes around 2 to 4 weeks from the submission of the required documents to the issuance of the KITAS.
What happens if my employment contract ends before my Work Permit KITAS expires?
If your employment contract ends, your employer must report the termination to the immigration office, and your KITAS will be canceled. You are required to leave Indonesia unless you secure another sponsorship or transition to a different visa type.
Can I conduct business activities on a Tourist Visa in Indonesia?
No, business activities such as attending meetings or negotiations are not allowed on a Tourist Visa. For such activities, you must apply for a Single-Entry Business Visa or a Multiple-Entry Business Visa, depending on your needs.
What are the consequences of working in Indonesia without a Work Permit KITAS?
Working without a proper Work Permit KITAS (Index E23) is a serious violation of Indonesian immigration laws. It can lead to fines, deportation, and possible blacklisting, preventing future entry into Indonesia. Always ensure you have the correct permit before engaging in any employment.
Can I change my visa type while in Indonesia?
In most cases, changing visa types (e.g., from a Business Visa to a KITAS) requires leaving Indonesia and applying from abroad. However, specific visas, such as a temporary visa to KITAS, may be converted under certain conditions. We can guide you on the best approach based on your situation.
Can I apply for a Work Permit KITAS (Index E23) if I am a freelancer or self-employed?
No, freelancers or self-employed individuals cannot apply for a Work Permit KITAS. The KITAS requires sponsorship from an Indonesian company that employs you in a specific role. However, other visa types may be available depending on your circumstances and types of freelancer activity.
How soon should I apply for a KITAS renewal before it expires?
It is advisable to begin the renewal process 30 to 60 days before your KITAS expires to allow sufficient time for processing.
Can I hold both a Work Permit KITAS and an Investor KITAS simultaneously?
No, you cannot hold both at the same time. You must choose between the Work Permit KITAS and the Investor KITAS depending on your role in Indonesia, whether it is as an employee or an investor.
What if my company’s investment level drops below the threshold required for an Investor KITAS?
If your investment falls below the required threshold (IDR 1 billion in shares or IDR 10 billion in capital), your Investor KITAS may be revoked, and you could lose your right to stay in Indonesia under that permit. It’s essential to monitor your investment levels to maintain compliance.
Can I study in Indonesia with an Investor KITAS or Work Permit KITAS?
No, these KITAS types are for business or employment purposes only. If you plan to study in Indonesia, you would need to apply for a Student KITAS, which is specifically designed for education.
How does the Multiple Exit Re-entry Permit (MERP) work with a KITAS?
The MERP allows you to leave and re-enter Indonesia while holding a KITAS. Without a MERP, your KITAS would be invalidated upon exit. The permit typically lasts for the duration of your KITAS and must be renewed along with your KITAS if needed.
Can I apply for a KITAS on arrival in Indonesia?
No, you cannot apply for a KITAS upon arrival. The KITAS must be processed before entering Indonesia, and you will need an entry visa related to the KITAS (e.g., VITAS) to convert it into a KITAS upon arrival.
Employees who are terminated are entitled to severance pay, long-service pay (if applicable), compensation rights, and other benefits as mandated by Government Regulation No. 35 of 2021. The amount depends on the reason for termination and the employee’s length of service.
What is a Cross-Border Tax Opinion?
A Cross-Border Tax Opinion provides expert analysis and advice on how Indonesian tax laws apply to your international business transactions. It helps you understand and manage tax obligations when dealing with foreign income, investments, and operations.
What are the common issues addressed in a Cross-Border Tax Opinion?
Common issues include managing double taxation, understanding withholding tax on foreign payments, navigating tax treaty benefits, and addressing transfer pricing concerns.
Is a Cross-Border Tax Opinion legally binding?
While a Cross-Border Tax Opinion is not legally binding, it offers authoritative guidance based on the current interpretation of Indonesian tax laws. It’s a critical tool for informed decision-making and compliance.
What information do I need to provide for a Cross-Border Tax Opinion?
We’ll need details about your business structure, the nature of your international transactions, relevant financial data, and any existing tax documentation. The more information you provide, the more precise our analysis can be.
What are the tax treaties that Indonesia has in place, and how do they affect my cross-border transactions?
Indonesia has tax treaties with various countries to avoid double taxation and prevent tax evasion. These treaties can impact how your international income is taxed, offering potential tax reliefs. We help you understand and apply these treaty benefits effectively.
What is a permanent establishment, and how does it impact my tax obligations?
A permanent establishment (PE) is a fixed place of business through which a foreign enterprise conducts business in Indonesia. If your business activities create a PE, you may be subject to Indonesian corporate income tax. We can help you determine if your operations constitute a PE and advise on managing the tax implications.
How does Indonesian tax law treat digital services provided from abroad?
Digital services provided by foreign companies to Indonesian consumers may be subject to Value Added Tax (VAT) and other local taxes. Our services help you navigate these regulations and ensure proper tax compliance for your digital operations.
Mutual agreements between employers and employees to terminate an employment relationship must be documented in writing and signed by both parties. It is a voluntary process, and the employer typically offers compensation or severance payments in line with government regulations.