Job Creation Law: Govt Asserts Foreign Workers Will Be Taxed

TEMPO.CO, Jakarta - The Finance Ministry’s Director-General of Taxation, Suryo Utomo, denied exempting foreign workers from paying taxes through the Omnibus Law on Job Creation. The newly-enacted law states that foreign nationals are still subject to the income tax (PPh).

“Are they freed from taxes? No. Income generated from Indonesia is not exempted, it is still subject to taxes for the first four years,” said Suryo in a virtual discussion on Monday, October 12, 2020.

However, he admitted there would be an incentive for foreigners who worked in Indonesia in their first four years. After that, normal tax rates will apply.

According to Suryo, through the new law, foreigners are only obliged to pay taxes for income earned from Indonesia. If after four years they still have a job in the country, the taxes will also be applied to income paid outside Indonesia in accordance with the international applicable rules.

“After the four years, they are subject to normal taxes. For the first four years, they will be given such an incentive for coming to Indonesia, transfer of knowledge, and get the privilege that the taxes only are only applied to income generated from Indonesia,” Suryo explained.

The Taxation Director-General went on to say that the incentive was mainly aimed at attracting foreign workers with special skills to come to Indonesia and share their knowledge or expertise.

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MUHAMMAD HENDARTYO