Indonesia Individual Tax Guide

Indonesia

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Executive contacts

Santoso Goentoro

Kartina Indriyani

Immigration contact

Henry Tambingon

+62 (21) 5289-5584

Fax: +62 (21) 5289-5056

Email: santoso.goentoro@id.ey.com

+62 (21) 5289-5240

Fax: +62 (21) 5289-5150

Email: kartina.indriyani@id.ey.com

+62 (21) 5289-5033

Fax: +62 (21) 5289-5201

Email: henry.tambingon@id.ey.com

A new law, which is effective from 2 November 2020, contains significant changes to the immigration law. For details regarding these changes, see Section J. Because of the recent immigration law changes, readers should obtain professional advice before engaging in actions.

A. Income tax

Who is liable. In general, Indonesian-resident taxpayers are sub ject to tax on worldwide income. Nonresidents are subject to tax on Indonesian-source income only. Diplomats and representa tives of certain international organizations are excluded from Indonesian tax if the countries they represent provide reciprocal exemptions.

Indonesian citizens or foreign citizens are considered resident for tax purposes if they are present in Indonesia for more than 183 days within a 12-month period or if, within the calendar tax year, they reside in Indonesia with the intent to stay.

Under a new law, which is effective from 2 November 2020, foreign citizen individuals who are resident taxpayers in Indonesia will be taxed only on Indonesian-source income if they possess certain expertise within four years of becoming a tax resident.

Foreign individuals with certain expertise include the following:

• Foreign workers who are in certain professions and have satis fied the Ministry of Manpower requirement to employ foreign workers

• Foreign researchers as appointed or determined by the Ministry of Research and Technology or the Head of the National Research and Innovation Agency (Badan Riset dan Inovasi Nasional, or BRIN)

Twenty-five professions could be eligible for this exemption, mostly as experts in the areas of science, engineering, and/or mathematics, and include the following:

• Chemical experts (International Standard Classification of Occupation [ISCO] code 2113)

• Geology and Geophysics expert (ISCO code 2114)

• Chemical engineering expert (ISCO code 2145)

• Civil engineering expert (ISCO code 2142)

• Environmental engineering expert (ISCO code 2143)

The possession of certain skills must be proved by a certificate issued by the Indonesian government or the home country of the expatriate, an educational certificate and a minimum of five years of work experience in that field of expertise.

The expatriate will need to request approval from the Director General of Taxation (DGT). The DGT will conduct a verification and must respond to the request within 10 days.

For a qualifying expatriate, foreign-source income is generally exempt. Income earned or received in relation to employment, services or activities carried out in Indonesia that is paid outside of Indonesia is still taxable. The exemption does not apply to foreign citizens who claim benefits under tax treaty provisions.

An Indonesian citizen who resides outside Indonesia for more than 183 days within a 12-month period is considered to be a nonresident taxpayer if they meet certain conditions (place of residency, place of main activity, place of habitual abode and tax subject status [considered as a resident taxpayer in another coun try that is supported with a certificate of residence in that country and/or other certain conditions; that is, the individual fulfills the tax obligation in Indonesia and obtains a statement letter as a nonresident taxpayer issued by Indonesian tax office]).

Income subject to tax. The taxation of various types of income is described below.

Employment income Taxable income of an employee includes wages, salary, commissions, bonuses, pensions, directors’ fees and other compensation for work performed. Compensation in kind for work or services is not taxable income for the employee and is not a deductible expense for the employer. However, this treatment does not apply to employees of the following:

• Oil and gas companies under contracts entered into under pre1984 law

• Representative offices, which are not subject to Indonesian cor porate income tax

• Various international organizations and embassies

• Employers who are taxed based on a “deemed profit” basis

• Employers who are subject to final tax

Although fringe benefits provided to employees, including employer-provided housing and automobiles, are not included in an employee’s taxable income, they are allowable deductions for the employer if the employee works in a remote area. Approval for remote area status must be obtained by the employer. Benefits received in the form of cash allowances are taxable.

Termination pay and lump-sum pension payments are subject to final withholding tax at the rates set forth in Rates

An Indonesian national who works overseas for more than 183 days within a 12-month period is not subject to tax on his or her employment income that is earned overseas and that is subject to tax overseas if he or she has obtained the statement letter as a nonresident.

Self-employment and business income Members of partnerships, firms and associations, as well as other individuals, may be sub ject to tax on self-employment or business income.

Taxable income includes trading profits, profits from the sale of property connected with a business, annuities and waivers of debts (except a certain amount of waivers of debts as stipulated by government regulation).

Self-employment and business income is combined with other income and taxed at the rates set forth in Rates

Directors’ fees Directors’ fees are included in taxable employ ment income.

Investment income Dividends paid to individuals, rents, royalties and certain interest are subject to withholding tax at various rates. These types of investment income generally are combined with other income and taxed at the rates set forth in Rates. However, the 20% withholding tax on interest derived from the following investments is a final withholding tax:

• Time deposits, including time deposits placed abroad through a bank established in Indonesia or through a branch of a foreign bank

• Certificates of deposit

• Savings accounts

Income from the rental of land and buildings is subject to a final withholding tax at a rate of 10%.

Under the new law, which is effective from 2 November 2020, the following dividends are exempted from income tax for individual taxpayers:

• Dividends paid by domestic companies to resident taxpayers in Indonesia, if such dividends are invested in Indonesia for a certain time period

• Dividends paid by offshore companies and from after-tax prof its of offshore permanent establishments if such income is invested in Indonesia or used to support other businesses in Indonesia for a certain time period and satisfy certain condi tions

The Minister of Finance will issue the implementation regula tions for the specific criteria, procedures and time period for the investment in Indonesia and the procedures for the tax exemp tion.

Individual income taxpayers must make the investment in Indonesia by the end of the third month, and corporate taxpayers must make the investment in Indonesia by the end of the fourth month.

The period of investment is at least three years, calculated from the tax year the dividend was received.

Taxpayers need to report the investment realization to the tax office periodically, by the end of the third month. The report should be submitted up to the third year from the tax year in which the dividend was received.

Final income tax regime for small and medium-size business taxpayers. Effective from 1 July 2018, a new final tax regime applies to the business income of certain individuals and corporate taxpayers, excluding permanent establishments, with a gross turnover of less than IDR4,800,000,000 per year. Qualifying taxpayers are subject to income tax at a rate of 0.5% of their monthly gross turnover, and the income tax is considered to be final. The gross turnover includes a local branch’s gross income, except for income from outside Indonesia.

The following taxpayers are excluded from this final tax:

• Individual taxpayers performing trading and/or service activi ties who use assembled infrastructure and public facilities that are not intended for commercial use

• Corporate taxpayers who have not yet begun commercial operations

• Corporate taxpayers that generate annual turnover in excess of the IDR4.8 billion threshold within a year after beginning their commercial operations

The business income covered by the final tax regime does not include income from independent personal services, such as ser vices provided by lawyers, accountants, medical doctors and notaries.

Taxpayers qualifying for a different final tax regime (for exam ple, construction companies) are not eligible for this 0.5% final tax.

Income derived by qualifying taxpayers other than business income that is subject to this 0.5% final tax, is taxed according to the prevailing tax rules.

The maximum period of imposition of the final income tax is the following:

• Seven tax years for individual taxpayers

• Four tax years for taxpayers in the form of cooperative bodies, partnerships or firms

• Three tax years for corporate taxpayers in the form of a limited liability company

The period referred to in the paragraph above begins in the tax year when the taxpayer is registered for taxpayers who registered since the applicable government regulation was issued. For taxpayers who registered before the issuance of the government regulation, the period begins in the tax year of issuance of the government regulation.

Taxation of employer-provided stock options. Employer-provided stock options are not taxable to an individual at the time of grant or exercise. Income tax at the individual’s marginal tax rate is imposed at the time of sale on the difference between the sale price of the shares and the strike price. Sales of stock on the

Indonesian stock exchange are also subject to a final withholding tax at a rate of 0.1% on the gross sale value of the stock.

Capital gains and losses. Capital gains are taxed at the same rates as business income and income from employment (see Rates). Capital gains are added to income from other sources to arrive at total taxable income.

The transfer of shares listed on the stock exchange is subject to withholding tax at a rate of 0.1% of the gross value of the transfer if the transferred shares are ordinary shares. An additional tax at a rate of 0.5% of the share value is levied on sales of founder shares associated with a public offering. Both withholding taxes are final. Founder shareholders must pay the 0.5% tax within one month after the shares are listed. Founder shareholders who do not pay the tax by the due date are subject to income tax on the gains at the ordinary income tax rates.

Income tax on land and building transfer. A transfer of land and buildings is subject to final income tax on the deemed gain resulting from the transfer or sale. The tax is charged to the trans feror (seller). The tax rate is 2.5% of the gross transfer value (tax base). However, for transfers of simple houses and simple apart ments conducted by taxpayers engaged in the property development business, the tax rate is 1%. This tax must be paid on receipt of some or all payments for the transfer of rights to land and buildings. The income tax is calculated based on the amount of each payment received including the down payment, interest, col lection fees and other additional payments made by the buyer with respect to the transfer of the land and building.

The tax base is the higher of the transaction values stated in the relevant land and building right transfer deed or tax object sales value (Nilai Jual Objek Pajak, or NJOP). However, for transfers to the government, the tax base is the amount officially stipulated by the applicable government officer in the relevant document. In a government-organized auction, the gross transfer value is the value stipulated in the relevant deed of auction.

The transfer of rights deed can be signed by a notary only if the income tax has been fully paid.

Deductions

Deductible expenses To determine the taxable income of regular employees, gross income is reduced by the following amounts:

• Standard deduction at a rate of 5% of gross income, up to a maximum of IDR6 million a year

• Contributions to a pension fund approved by the Minister of Finance and to TASPEN (Pension Insurance Saving Agency), as well as old-age savings or old-age allowance contributions to TASPEN and to the Worker Social Security program (BPJS Ketenagakerjaan), paid by employees

To determine the taxable income of a pensioner, the gross pen sion is reduced by a deduction of 5% of the gross pension, up to a maximum of IDR2,400,000 a year.

Personal allowances. Annual personal allowances are deductible from taxable income.

The following are the amounts of the personal allowances.

Amount of allowance

Type of allowance IDR

Personal allowance 54,000,000

Married persons’ additional allowance 4,500,000

Wife’s additional allowance if receiving income not related to husband’s or other family member’s income 54,000,000

Additional allowance for each dependent family member in direct bloodline and for adopted children, up to a maximum of three individuals 4,500,000

Business deductions. A self-employed businessperson may deduct from gross income ordinary expenses connected with earning income, including costs of materials, employee remuneration, bad debts, insurance premiums and administrative costs. Taxes other than income tax are deductible. If employee income taxes are borne by an employer, a grossing-up calculation must be made to claim the expense as a deduction from gross profit.

A business may also deduct the following expenses:

• Depreciation and amortization, in accordance with specified rates

• Contributions to approved pension funds

• Losses from the sale of assets or rights used in a business

• Foreign-exchange losses

• Costs of research and development performed in Indonesia

• Scholarship, apprenticeship and training costs

• Fifty percent of the cost of automobiles provided to employees

• Fifty percent of the cost of mobile phones provided to employees

• Office refreshments provided to all employees

The following expenses may not be deducted:

• Provisions or reserves, with exceptions for certain industries

• Premiums for employees’ life and health insurance, unless paid by the employers and treated as income taxable to the employees

• Benefits in kind provided to employees, including housing

• Gifts, support and donations, with exceptions for certain dona tions

• Personal expenses

• Salary paid to a member of an association, partnership or a limited partnership whose capital is not divided into shares

• Income tax and administrative sanctions in the form of interest, fines and surcharges, and criminal sanctions in the form of fines in connection with provisions of the tax laws

Rates. The following tax rates apply to individuals.

Taxable income Tax rate Tax due Cumulative tax due IDR % IDR IDR

First 50,000,000 5 2,500,000 2,500,000

Next 200,000,000 15 30,000,000 32,500,000

Next 250,000,000 25 62,500,000 95,000,000

Above 500,000,000 30

The final withholding tax rates apply to termination pay.

Taxable income Tax rate Tax due Cumulative tax due IDR % IDR IDR

First 50,000,000

0 0

Next 50,000,000 5 2,500,000 2,500,000

Next 400,000,000 15 60,000,000 62,500,000

Above 500,000,000 25 —

The final withholding tax rates apply to lump-sum payments of pensions.

Taxable income Tax rate Tax due Cumulative tax due IDR % IDR IDR

First 50,000,000 0 0 0

Above 50,000,000 5 —

Nonresident taxpayers are subject to tax at a flat rate of 20% on all Indonesian-source income.

If the resident individual does not have a required Tax Identification Number, the tax rates for withholding tax on employment income are increased by 20%. As a result, the rates range from 6% to 36%.

Credits. If non-employment income is also taxed in the country in which it arises, a foreign tax credit is allowed in computing the Indonesian tax. The credit equals the lesser of the foreign tax or the Indonesian tax applicable to that income.

Relief for losses. In general, losses may be carried forward for up to five years.

A spouse’s business losses may be offset against the business profits of the other spouse.

B. Other taxes

Duty on the acquisition of land and building rights. In general, a transfer of land and building rights is subject to duty on the acquisition of land and building rights (Bea Pengalihan Hak Atas Tanah dan Bangunan, or BPHTB). The duty is payable by the buyer or the party receiving or obtaining the rights. Qualifying land and building rights transfers include sale-purchase and trade-in transactions, grants, inheritances, contributions to corpo rations, rights separations, buyer designations in auctions and executions of court decisions with full legal force. Acquisitions of land and building rights in certain nonbusiness transfers may be exempt from BPHTB.

The tax base for the BPHTB is the Tax Object Acquisition Value (Nilai Perolehan Objek Pajak, or NPOP), which in most cases is the higher of the market (transaction) value or the NJOP of the land and building rights concerned. The tax due on a particular event is determined by applying the applicable duty rate of 5% to the relevant NPOP less an allowable nontaxable threshold. The nontaxable threshold amount varies by region. The maximum is IDR60 million, except in the case of inheritance, for which it may reach IDR300 million. The government may change the nontaxable threshold through regulation.

BPHTB is normally due on the date that the relevant deed of land and building rights transfer is signed before a public notary. The deed of rights transfer can be signed by a notary only if the BPHTB has been paid.

C. Social security

The institution called Badan Penyelengara Jaminan Sosial (BPJS) administers the Indonesia social security program. BPJS has the following two categories:

• Worker Social Security (BPJS Ketenagakerjaan)

• Health Care (BPJS Kesehatan)

Both BPJS Ketenagakerjaan and BPJS Kesehatan are mandatory.

Expatriates are required to participate if they work in Indonesia for more than six months. Indonesia has not entered into a total ization agreement with any country.

The following percentage contributions of monthly salary are required for employers and employees under the Worker Social Security program.

Percentage of contribution Type of Employer Employee program % %

Accident benefit (a) (Jaminan Kecelakaan Kerja) 0.24 to 1.74 (b) 0

Life insurance benefits (a) (Jaminan Kematian) 0.3 0

Old-age benefit (a) (Jaminan Hari Tua) 3.7 2 Pension benefit (c) (Jaminan Pensiun) 2 1

(a) There is no salary cap to calculate the contribution. (b) The rate depends on the type of industry of the company. (c) The salary is capped at IDR8,754,600 per month, effective from March 2021. The maximum monthly contribution amount is IDR175,092 for the employer and IDR87,546 for the employee. The salary cap is adjusted each year by a factor of one plus the previous year’s gross domestic growth. An expatriate is not required to participate in the pension benefit.

The following percentage contributions of monthly salary are required for employers and employees under the Health Care program.

Percentage of contribution (%)

Employer 4 Employee 1

For the contributions under the Health Care program, the salary is capped at IDR12 million per month, effective from 1 January 2020. Consequently, the maximum employer contribution is IDR480,000 per month, and the maximum employee contribution is IDR120,000 per month.

D. Tax filing and payment procedures

The tax year in Indonesia is the calendar year.

Married persons can separately file their own income tax returns even if they did not enter into a prenuptial agreement.

Employee taxes are withheld by the employer. The employer must file a monthly return by the 20th day of the following month. The monthly tax return for December serves as the annual return because it also reports the cumulative income and related tax for the respective calendar year.

Individuals are required to file individual income tax returns by 31 March following the end of the tax year. Individuals earning income only from employment are not required to file monthly tax returns.

Withholding tax is levied on a variety of payments to residents. A self-employed professional, including an accountant, lawyer, architect or consultant, has tax withheld at source on the settle ment of invoices. The withholding tax rate is 2% of the gross amount. Withholding tax is an advance payment of income tax.

Self-employed individuals must make monthly advance tax pay ments. The monthly payment amount is based on the previous year’s tax liability, reduced by tax withheld at source during the preceding year. The payment is due on the 15th day of the month following the income month.

Nonresident foreign taxpayers are not required to file tax returns in Indonesia, unless they conduct business or activities in Indonesia through permanent establishments.

E. Double tax relief and tax treaties

A taxpayer who has income derived outside Indonesia that is subject to taxation abroad is entitled to a credit, not to exceed the Indonesian tax payable on the foreign income.

Indonesia has entered into double tax treaties with the following jurisdictions.

Algeria Japan Seychelles

Armenia Jordan Singapore Australia Korea (North) Slovak Republic Austria Korea (South) South Africa Bangladesh Kuwait Spain Belarus Luxembourg Sri Lanka Belgium Malaysia Sudan Brunei Mexico Suriname Darussalam Mongolia Sweden Bulgaria Morocco Switzerland Canada Netherlands Syria China Mainland New Zealand Taiwan Croatia Norway Thailand Czech Republic Pakistan Tunisia Denmark Papua New Guinea Turkey Egypt Philippines Ukraine Finland Poland United Arab France Portugal Emirates Germany Qatar United Kingdom

Hong Kong Romania United States Hungary Russian Uzbekistan India Federation Venezuela Iran Saudi Arabia Vietnam Italy

The tax treaties generally provide for the elimination of double taxation of personal income and include specific provisions pertaining to artists, athletes, teachers, students and those engaged in employment and independent personal services.

F. Free visa jurisdictions and visas

Several types of visas are available for a foreigner coming to Indonesia as a visitor. Under Presidential Regulation No. 21 Year 2016, the number of jurisdictions whose nationals are exempted from the obligation to obtain a Visit Visa in advance to enter Indonesia is increased to 169. This exemption is subject to the following terms and conditions:

• The exemption can be applied to carry out various activities such as for tourism, transit, family visits, social, art and cul tural activities, government visits, giving lectures, attending business meetings, seminars and conferences, and certain other activities.

• The exemption cannot be used for journalistic purposes.

• The duration of the stay in Indonesia is limited to 30 days.

• The exemption cannot be renewed, extended or converted into another type of visa.

• Nationals of foreign jurisdictions eligible for the exemption may only enter Indonesia through certain immigration check points.

This Visit Visa exemption is available to nationals from the fol lowing jurisdictions.

Albania Guatemala Philippines Algeria Guyana Poland

Andorra Haiti Portugal Angola Honduras Puerto Rico

Antigua and Hong Kong Qatar Barbuda Hungary Romania

Argentina Iceland Russian Armenia India Federation Australia Ireland Rwanda

Austria Italy St. Kitts

Azerbaijan Jamaica and Nevis

Bahamas Japan St. Lucia

Bahrain Jordan St. Vincent Bangladesh Kazakhstan and the Barbados Kenya Grenadines

Belarus Korea (South) Samoa

Belgium Kiribati San Marino

Belize Kuwait São Tomé

Benin Kyrgyzstan and Príncipe

Bhutan Laos Saudi Arabia

Bolivia Latvia Senegal

Bosnia and Lebanon Serbia

Herzegovina Lesotho Seychelles

Botswana Liechtenstein Singapore

Brazil Lithuania Slovak Republic

Brunei Luxembourg Slovenia

Darussalam Macau Solomon

Bulgaria Madagascar Islands

Burkina Faso Malawi South Africa

Burundi Malaysia Spain

Cambodia Maldives Sri Lanka

Canada Mali Suriname

Cape Verde Malta Sweden

Chad Marshall Switzerland

Chile Islands Taiwan

China Mainland Mauritania

Tajikistan

Comoros Mauritius Tanzania

Costa Rica Mexico Thailand

Côte d’Ivoire Moldova

Timor-Leste

Croatia Mongolia Togo

Cuba Monaco

Tonga

Cyprus Morocco Trinidad and

Czech Republic Mozambique Tobago

Denmark Myanmar Tunisia

Dominica Namibia Turkey

Dominican Republic Nauru Turkmenistan

Ecuador Nepal Tuvalu

Egypt Netherlands Uganda

El Salvador New Zealand Ukraine

Estonia Nicaragua United Arab

Eswatini North Macedonia Emirates Fiji Norway United Kingdom

Finland Oman United States

France Palau Uruguay

Gabon Palestinian Uzbekistan

Gambia Authority Vanuatu

Georgia Panama Vatican City

Germany Papua New Venezuela

Ghana Guinea Vietnam Greece Paraguay Zambia

Grenada Peru Zimbabwe

Visitors from 68 jurisdictions may obtain a visa on arrival and pay a visa-on-arrival fee, which is IDR500,000. The visa has a duration of up to 30 days and can be extended only one time for an additional period of up to 30 days. The following are the juris dictions whose nationals may obtain a visa on arrival.

Algeria Hungary Poland

Andorra Iceland Portugal Argentina India Qatar Armenia Ireland Romania Australia Italy Russian

Austria Japan Federation

Bahrain Korea (South)

Saudi Arabia

Belarus Kuwait Seychelles

Belgium Latvia

Slovak Republic

Brazil Libya Slovenia Bulgaria Liechtenstein

South Africa

Canada Lithuania Spain

China Mainland Luxembourg Suriname

Croatia Maldives Sweden

Cyprus Malta Switzerland

Czech Republic Mexico Taiwan Denmark Monaco Timor-Leste

Egypt Netherlands Tunisia

Estonia New Zealand Turkey

Fiji Norway

United Arab

Finland Oman Emirates

France Panama

Germany Papua New Guinea

Greece

United Kingdom

United States

Visitors from other jurisdictions must apply for a visa at an Indonesian embassy or consulate abroad.

Foreign visitors wishing to conduct business meetings or noncommercial activities that have governmental, tourism, social and cultural aspects may obtain one of the following entry visas from an Indonesian embassy or consulate abroad:

• Visa Kunjungan (VK) (Single Entry Visit Visa)

• Visa Kunjungan Beberapa Kali Perjalanan (VKBP) (Multiple Entries Visit Visa)

A VK is issued for a visit of up to 60 days. The company or spon sor must provide a valid reason for requesting the visa, which may be renewed for additional one-month periods, subject to a maxi mum duration of the visa of six months (may be renewed four times). A VK application may be submitted directly to the Indonesian embassy or consulate in the home country or through the Directorate General of Immigration (DGI) in Indonesia. A holder of a VK or VKBP is not eligible for a work permit. A VK becomes invalid on exit from Indonesia, and another similar visa is required for any subsequent similar visits.

The VKBP application must be made by a sponsor to an office of the DGI in Indonesia. The DGI is now issuing an electronic visa (e-Visa) when the visa application is approved. An applicant can directly enter Indonesia with an e-Visa and is no longer required to endorse the visa at the Indonesian Embassy overseas.

A VKBP is valid for a maximum period of 12 months. Under this type of visa, each visit may not exceed 60 days. A VKBP is rec ommended for people who regularly visit Indonesia to conduct business meetings and who do not establish residency in Indonesia.

Entry restrictions during COVID-19 pandemic. Indonesia’s border is still closed to foreigners. Exemptions apply to the following visa and stay permit holders:

• Official/Diplomatic Visa

• Official/Diplomatic Stay Permit

• Temporary/Permanent Stay Permit

• Active crew member

Effective from 15 September 2021, Indonesia also allows the following visa holders to enter Indonesia:

• Visit Visa

• Asia-Pacific Economic Cooperation (APEC) Card

• Limited Stay Visa

The Visa on Arrival and Visa Exemption (Free Visa) are still suspended until the COVID-19 pandemic is declared over by the Indonesian government.

G. Work permits and self-employment

The Indonesian government prefers that expatriates be employed in Indonesia only in positions that cannot currently be filled by Indonesian nationals. Companies that wish to hire expatriates must provide the necessary education and training programs for Indonesians who will replace the expatriates within a reasonable time period.

In addition, employers must appoint Indonesian employees as the counterpart of the foreign workers and implement education and training for Indonesian employee as part of a transfer-ofknowledge program. The employer also is obliged to facilitate education and training of and the teaching of Indonesian lan guage to the foreign workers.

Employers must require their expatriate employees to obtain work and stay permits. Obtaining the necessary visas and work permits in Indonesia can be a protracted and complex process. It is strong ly recommended that a prospective employer work with a local agent to obtain the permits and visas necessary to employ expatri ates. Work permits are usually issued for a maximum period of 12 months and may be extended, subject to approval from the government.

Application procedure. An employer or sponsor must submit the Foreign Manpower Utilization Plan (Rencana Penggunaan Tenaga Kerja Asing, or RPTKA) to the Ministry of Manpower (MoM). A manpower plan must be approved before the submis sion of a work notification application (an application to get approval from the MoM for the local sponsor company to hire a foreign worker in Indonesia).

For the renewal of a permit, the following documents are also required:

• Color copy of Tax Registration Number (Nomor Pokok Wajib Pajak, or NPWP)

• Color copy of the Indonesia social security program registration certificate from both the employer and the employee

Under Ministry of Manpower Regulation No. 34 Year 2021, the employer must pay in advance the DKPTKA in the amount of USD100 per month for each foreign person employed.

After the DKPTKA payment is made, the MoM will forward the process to the DGI for the issuance of the VITAS and ITAS.

On arrival in Indonesia with the VITAS, the immigration author ity grants the ITAS, which includes the multiple re-entry permit, at the immigration checkpoint on completing the biometric. The ITAS is valid as the stay permit for working purpose for foreign workers.

The expatriate and all of his or her family members must register with the local authorities after the ITAS is issued to obtain a Police Report Certificate (Surat Tanda Melapor, or STM), Residence Card (Surat Keterangan Tempat Tinggal or SKTT), and Report of Presence (Laporan Keberadaan).

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On the expiration of the work permit, a final exit permit, known as the Return on Immigration Document (RID), is required. The RID is valid for seven calendar days after the submission date. The expatriate is required to leave the country within this period.

Self-employment. Only Indonesian citizens may conduct business in Indonesia as self-employed persons. Citizens of other countries must obtain the sponsorship of employers in Indonesia.

H. Residence visas

The residence visa, known as a Limited Stay Visa (VITAS; see Sections F and G) is valid for up to 12 months. It is issued exclu sively to expatriates who are working in accordance with the prevailing government regulations. An expatriate working in Indonesia on a work permit must obtain an ITAS (see Sections F and G) and other relevant stay permits.

The family members’ VITAS applications can be submitted after the assignee’s VITAS is obtained. The ITAS and other stay per mits may also be applied for dependents who accompany the expatriates to reside in Indonesia.

An ITAS is renewable up to five times. Each extension is valid for one year.

I. Family and personal considerations

Family members. A foreign national possessing an ITAS and a work permit may apply for his or her spouse and children (maxi mum age of 18 years old) to reside in Indonesia if they fulfill the necessary requirements. A copy of the marriage certificate and a complete copy of the passport are required for the spouse, and birth certificates and complete copies of the passports are required for the children.

The spouse of a foreign national who wishes to work in Indonesia must obtain a separate work permit sponsored by the employer.

Driver’s permits. Foreign nationals may not drive legally in Indo nesia using their home country driver’s licenses. Inter national driver’s licenses are acceptable. Indonesia provides no driver’s license reciprocity with other countries.

To obtain an Indonesian driver’s license, foreign nationals must take a written and a physical exam. Photocopies of the passport, the ITAS and the SKTT must be attached to the driver’s license application.

In view of the driving conditions and commuting time, it is rec ommended that foreign nationals hire Indonesian drivers. The base salary for drivers is about USD170 per month.

J. Recent immigration law changes

A new law, which is effective from 2 November 2020, contains significant immigration law changes, which are discussed below.

The new law states that a visa and stay permit can be issued manually or in the form of an electronic visa (e-Visa).

A Visit Visa can also be granted for pre-investment activity.

A VITAS can also be granted for foreigners who have their sec ond home in Indonesia. Further provisions regarding the VITAS are regulated in the Government Regulation.

A guarantor requirement for a foreigner does not apply to a for eign investor who invests in Indonesia in accordance with the investment laws and regulations, and this exemption also applies to a citizen of a jurisdiction that applies this rule reciprocally.

The manpower law has provided an exemption from the RPTKA requirement for representatives of foreign jurisdictions who use foreign workers as diplomatic and consular employees, and a regulation provided an exemption for directors or commissioners with certain ownership or shareholders in accordance with the provisions of laws and regulations. In the new law, there is an additional exemption for foreign workers who are required by the employer in the production activity in the case of emergencies, vocational skills (specific skills required for the production activ ity), technology-based startups, business visits and research for a certain time period.