When is Indonesia Considered Your Tax Resident? We Explain the New Rules
One of the most common fears among foreigners in Indonesia is
“What if I am recognized as a tax resident and forced to pay taxes?”
At the end of 2025, everything became clearer: the Indonesian Tax Administration approved a new regulation PER-23/PJ/2025, which directly defines who is considered a tax resident and who is not.
The document came into effect on December 9, 2025.
From this moment on, old clarifications no longer apply, and tax authorities will adhere to the new rules.
Your status determines — which income and where you are required to declare and tax.
The regulation uses two key concepts:
SPDN (Subjek Pajak Dalam Negeri) — Indonesian tax resident
SPLN (Subjek Pajak Luar Negeri) — non-resident taxpayer of Indonesia
The difference between them is fundamental:
SPLN only pays tax on income received from sources in Indonesia
SPDN is obliged to pay tax on all worldwide income, including income from abroad
Therefore, it is important to understand:
Which status you belong to according to the new rules
Is there a risk that you will be automatically recognized as a tax resident
What the new tax approach changes
Your real obligations and risks directly depend on your tax status.
The status of SPDN or SPLN determines:
the amount of taxes
the need to declare worldwide income
the application of double tax avoidance agreements (P3B)
the risk of reassessments and audits
Previously, many relied on formal indicators:
citizenship, type of visa, lack of registration or "I'm just living in Bali."
According to the new PER-23/PJ/2025 regulation, these are no longer sufficient. The tax authority now looks at how a person or company actually lives and works.
When an individual is recognized as a tax resident (SPDN)
The Indonesian tax authority can recognize an individual as a tax resident (SPDN) if at least one of the conditions below is met.
1. Permanent residence in Indonesia
If a person actually lives in the country and is not just visiting as a tourist.
Formal registration is not important.
2. Stay longer than 183 days
If you stay in Indonesia for more than 183 days within any 12 months, it does not have to be a calendar year.
3. Intention to reside in Indonesia
Even if 183 days have not been reached yet, SPDN status is possible if the tax authority sees that a person intends to live in the country permanently.
In this case, the tax authority assesses the real situation. They take into account:
type and duration of visa, including KITAS and KITAP
the presence of family in Indonesia
place of main work or business
leasing or owning property
long-term residency without signs of tourism
Important: registration data alone is not enough. The tax authority looks at the real situation.
When a company is recognized as a tax resident of Indonesia (SPDN)
For companies, the logic is similar, but the consequences are usually even more serious.
A legal entity is recognized as a resident if:
1. The company is established under Indonesian law
If a business is registered in Indonesia (e.g., PT PMA or PT), — this is a direct basis for tax resident status.
2. There is a registration or domicile in the country
Having an official address, registration, or legal presence in Indonesia already connects the company with the local tax system.
3. The management center is located in Indonesia
This is the most “slippery” and often underestimated criterion.
The management center is not the address in the founding documents.
It is the place where key decisions are actually made, specifically:
business strategy is approved;
financial decisions are made;
operational and managerial control is exercised.
If the company management is constantly in Indonesia and runs the business from here, the regulator believes that decisions are made here.
The new regulation directly strengthens the substance over form principle —
real activities are more important than formal structure.
Even if on paper the company is “foreign”, but is actually managed from Indonesia, it can lead to its recognition as a tax resident with all ensuing obligations.
This is where most disputes, questions, and audits are expected in 2026.
When the non-resident tax status (SPLN) is applied
Good news: not everyone is automatically recognized as an Indonesian tax resident.
SPLN status is applied if a person or company has a stable connection with another country.
An individual or business is generally considered a non-resident taxpayer (SPLN) if:
actual activity is conducted outside Indonesia
the center of life or economic interests is abroad
tax residency is confirmed in another state
In simple terms, if your work, business, main income, and tax life are not in Indonesia, you have grounds to maintain SPLN status.
What citizens of Indonesia (WNI) need to know
Citizenship alone does not make a person a tax resident.
SPLN status is possible if the citizen:
actually resides outside Indonesia;
meets the criteria of a non-resident taxpayer;
correctly closed tax obligations previously incurred as SPDN.
If the center of life, work, and income is abroad, even an Indonesian citizen may not fall under the tax resident status — provided that their tax history is properly documented.
The role of double tax avoidance agreements (P3B)
If there is a situation where two countries simultaneously consider you a tax resident, it does not necessarily mean you have to pay taxes twice.
This is exactly what double tax avoidance agreements (P3B) exist for, which Indonesia has concluded with many countries.
The new PER-23/PJ/2025 regulation explicitly accounts for the operation of these agreements and confirms:
in case of dual residency, a tie-breaker test is applied — a mechanism that helps determine one main country of tax residency.
For this, they take into account:
the center of life interests
permanent home
place of habitual residence
citizenship (lastly)
What changes in practice
The new regulation makes the rules more transparent.
Now the tax authority:
provides clear guidelines on how residency is determined;
emphasizes actual residence and real business rather than formalities;
reduces the significance of visas, registration, and "paper status."
This is especially important for expats, investors, and remote workers who are physically in Indonesia but believe taxes do not concern them.
Why it is important not to make a mistake with the status
Incorrectly determined tax status can lead to:
back taxes for previous periods;
fines and penalties;
tax audits;
denial of the application of P3B agreements, even if they formally exist.
Practical examples
Example 1. Expat with KITAS but without 183 days in Indonesia
Situation: A foreigner obtained an investor KITAS. He has a share in an Indonesian PT PMA company.
While he:
spends about 120 days in Indonesia annually
lives mostly in Europe
earns primarily outside of Indonesia
Foreigner's position: He spends less than 183 days in Indonesia, so he considers himself a non-tax resident (SPLN) of this country.
How the tax authority views it: The number of days is not the only factor. The tax authority assesses the entire picture.
In this case, they consider:
long-term KITAS
investment in Indonesian business
signs of the intention to live and work in the country
What this means in practice: Even without 183 days, a person can be recognized as SPDN.
A factual review is needed and, if necessary, the application of P3B.
Example 2. Remote employee in Bali, more than 183 days in Indonesia
Situation: A foreigner lives in Bali and works remotely for a foreign company.
He effectively:
spends more than 200 days a year in Indonesia
receives a salary from abroad
does not work for local companies
Foreigner's position: Income is not from Indonesia, so there are no taxes here. Many think so.
How the tax authority views it: Residence is decisive. More than 183 days in the country — is tax residency.
Under the PER-23/PJ/2025 rules, such a person is SPDN.
What this means in practice:
In such a case, a foreigner has the obligation to:
declare all worldwide income
deal with taxes in Indonesia
check the possibility of applying P3B
Conclusion: Remote work does not exempt from taxes. What matters is not where the income comes from, but where the person lives.
Example 3. PT PMA investor living outside Indonesia
Situation: A foreigner owns a PT PMA in Indonesia. At the same time, he has not obtained a KITAS.
He effectively:
visits Indonesia 1–2 times a year
permanently lives in another country
manages the business through partners or directors
How it's assessed: The person does not live in Indonesia, so he does not accumulate 183 days. There is no intention to move.
What this means: The investor remains a non-resident taxpayer (SPLN). Having a business does not automatically make him SPDN.
Conclusion: The status of the company and the status of the owner are different things.
It is important to separate business and personal residence.
What to do next
If you live in Indonesia, conduct business, invest, or simply spend a significant amount of time here, the best solution is to check your tax status in advance rather than after receiving a request from the tax authority.
