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The Overview of Applying for Certificate of Domicile for Indonesian Tax Residents

Applying for Certificate of Domicile for Indonesian tax residents will help circumvent dual taxation woes. 3E Accounting shows you the way.

Applying for Certificate of Domicile (CoD) for Indonesian tax residents is the smart way to avoid double taxation on income. Tax is an essential part of any country’s economy and integral to government revenue. It is a sustainable source of funding that keeps a country’s infrastructure running. Hence, a stable, reliable taxation code will set a country well onto the road of economic success.

As geographical boundaries no longer restrict business, the issue of paying taxes is a significant concern for both individuals as well as corporate entities. In Indonesia, CoDs are issued by the Directorate General of Taxation (DGT) and are a convenient way for Indonesian residents to claim tax treaty benefits. Indonesia has signed Double Taxation Avoidance Agreements (DTAA) with a host of other countries. As such, CoDs facilitate double tax exemption for residents with dual tax residency status.

 

Getting a Certificate of Domicile

Earning a foreign income is a desirable achievement, but it can lead to taxation headaches. There is plenty of scope for ambiguities, especially as to where and how you will end up paying your taxes. In most countries, the DTAA treaties aim to solve this and other tax-related issues.

Generally, any individual or Indonesia company that is domiciled and carries out its business activities in Indonesia is subject to tax obligations. This also applies to non-residents who are getting an income from Indonesia. The first step in claiming relief under Indonesia’s tax treaty is to get your CoD.

Recently, there have been some changes in this arena. In 2017, new regulations were issued by the DGT, which revoked and replaced the previous 2010 issuance. Further revisions then followed this. From 2019 onwards, the new standard applies – DGT Regulation Number PE-25/PJ/2018 on Procedures for the Implementation of Double Tax Avoidance Agreement.

This regulation merges the previous two-form requirement into a single two-page DGT Form. Further, the DGT Form is now submitted electronically as opposed to the manual certified copy submission. These changes were instituted to prevent abuse of tax treaty benefits.

The new DGT Form, which is issued by the Indonesian Tax Authorities (ITA), has seven categories to be filled and will serve as a certificate of residence as well. The form needs to be submitted only once per year (as opposed to the previous monthly submission requirement) and is valid for 12 months. Foreign taxpayers will have to declare all matters pertaining to the income and get an endorsed CoD or Certificate of Residence (CoR) from the DTAA partner country.

 

Tax Savvy Partners

It can be a daunting task to manage all your taxation needs and requirements. Industry experts such as 3E Accounting have the skill and professional expertise that can help you make sense of it all. Applying for Certificate of Domicile for Indonesian tax residents need not be a challenge. Let the industry experts guide you on best practices.

Contact 3E Accounting today to set yourself up for tax success.