Bali is a top destination for digital nomads seeking a balance of work and relaxation, but tax in Bali obligations for remote workers can be confusing.
Let’s understand the basics of tax laws for digital nomads in Bali,
Do Digital Nomads Pay Tax in Bali?
- Indonesian Tax Law
Indonesia tax system is based on residency. This means that your tax status depends on how long you stay in the country, rather than where your income comes from.
If you are a resident, you may need to report your income in Indonesia.
This residency-based approach makes it essential to know the rules for tax in Bali, especially if you are staying long-term.
Tax Residency in Indonesia
In Indonesia, tax residency is determined by time spent in the country.
Staying in Indonesia for 183 days or more in a 12-month period makes you a tax resident.
This rule is important for digital nomads who plan to stay in Bali for extended periods, as becoming a tax resident could mean owing taxes on global income.
How Long Can Digital Nomads Stay in Bali Without Tax Implications?
If you plan to stay in Bali short-term like for a few weeks or a couple of months you likely won’t be considered a tax resident.
Most tourist visas allow a stay of up to 60 days, with some options to extend.
Yet, the longer you stay, the more likely it is that you may meet the 183-day rule and be seen as a tax resident.
What happens if You are Classified as a Tax Resident?
If you are considered a tax resident, you may need to pay Indonesian taxes on your income, even if you earn it from foreign clients.
Indonesia has progressive tax rates, ranging from 5% to 30% based on your income level.
Being classified as a tax resident it means filing a tax return in Indonesia, even if your earnings come from abroad.
Read: Where is the safest place for female digital nomads?
183-Day Rule
Many countries use the 183-day rule as a standard guideline when determining tax residence or tax in Bali.
You are deemed a tax resident of Indonesia if you stay for 183 days or longer in 12 months.
This period can be spread out over several visits in the year, not just a single stay.
Digital nomads staying long-term should be cautious, as this rule could require them to file and pay taxes in Indonesia.
Income Sources and Taxable Amounts
- Not all income may be taxed, but if you are classified as a tax resident, you must report your global income.
- Foreign-earned income may still be taxable under Indonesian law if you meet the residency criteria.
- Some digital nomads work with tax professionals to understand if their specific income sources will be subject to tax in Indonesia.
Recent Changes in Bali Tax Regulations for Digital Nomads
Indonesia has been exploring a “digital nomad visa” that could offer tax advantages.
Since the government is discussing potential updates to make it easier for remote workers to live in Bali without full tax obligations, there is no official law yet.
Yet, keeping an eye on this potential tax in Bali changes could be beneficial for digital nomads planning to stay long-term.
Tips for Staying Tax-Compliant as a Digital Nomad in Bali
- Know Your Visa: Certain visas may limit the time you can stay without tax implications.
- Track Your Days: Keep a record of your time in Bali to avoid passing the 183-day mark unintentionally.
- Consult a Tax Expert: A professional can clarify tax residency and help with filing if you become a tax resident.
Bottom Line
Bali offers an attractive lifestyle for digital nomads, but understanding your tax obligations is necessary to enjoy your stay.
