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Digital nomad taxes in Bali: Which should I pay?
Are you a digital nomad in Bali wondering what taxes you need to pay? Learn how the tax system works on the island and stay compliant while living your tropical dream.
Possibly, it is the most popular destination for remote workers worldwide seeking a high quality of life at low costs. But what taxes do you need to pay in Bali as a digital nomad?
In this article, we explain how the local tax system works on this idyllic Indonesian island, which law governs it, what rates apply, if you can benefit from any tax incentives, and other useful tips to meet your tax obligations in this destination.
Live and work remotely in Bali with the peace of mind of staying up to date with your tax situation. Let’s get started!
How do taxes work for a digital nomad?
The key to understanding what kind of taxes a digital nomad is required to pay in Bali is defining your residency status on the island. If you stay more than 183 days a year, you’ll be considered a tax resident and, therefore, you’ll need to declare your worldwide income, both from within and outside the country.
On the other hand, if you’re not a tax resident, you’ll only need to pay tax on the income you generate within the island.
The tax system in Indonesia operates via a progressive personal income tax, ranging from 5% to 35%, depending on your income level, as we’ll see later.
Which law regulates taxes for digital nomads in Bali?
The law that regulates taxes for digital nomads in Bali and throughout Indonesia is the Income Tax Law (UU Pajak Penghasilan), also known as Law PPh No. 36/2008.
Additionally, you must submit your tax declaration to the Indonesian Tax Directorate General (DJP) via their online portal.
When should I start paying taxes in Bali?
Since 2022, the Indonesian government has been working on a tax system much more favourable to foreigners who earn income by working remotely on the island due to the boom in remote workers arriving, thanks to the digital nomad visa for Indonesia.
The main feature of this visa, which sets it apart from other countries, is that you can reside in the country for up to five years. Also, during this time, you won’t pay any tax if your earnings come from foreign companies. All advantages, right? The downside is that this visa is still not active, but it has been under development for three years, so we hope it will be available soon.
For now, the visas available for digital nomads on the island are:
- Bali Visit Visa B211A: You can stay for up to 60 days, renewable up to 180 days.
- Remote Worker Visa E33G: Valid for up to 12 months, as long as you work for foreign clients.
With this clear, if you stay for more than 183 days within a 12-month period on the island, as a digital nomad, you will have to pay taxes in Bali.
Tax benefits for digital nomads in Bali
While we await the implementation of Indonesia’s tax exemption for the first five years of residency for nomads, let’s see what current tax benefits are available:
- If you sell digital services to other countries, you’re not required to apply VAT to these products.
- Tax exemption for income earned from foreign clients if you’re not considered a tax resident.
- Reduction of the tax burden thanks to double taxation treaties.
- Deduction for the purchase of material related to your professional activity.
How much do I have to pay in taxes in Bali?
Once you exceed the 183-day residency period on the island, you become a tax resident and are required to pay taxes in Bali as a digital nomad.
As we explained earlier, the main tax you’ll face is income tax, which is progressive based on your annual earnings. Here are the rates:
- 5% rate: For income up to $3,720 (€3,393).
- 15% rate: For income between $3,720 – $15,500 (€3,393 – €14,141)
- 25% rate: For income between $15,500 – $31,000 (€14,141 – €28,283)
- 30% rate: For income between $31,000 – $310,000 (€28,283 – €282,830)
- 35% rate: For income over $310,000 (€282,830)
In addition to income tax, if you are self-employed and register your business in Bali, you may be subject to:
- Business Activity Tax (PPh Final 0.5%): If your income does not exceed certain limits and you are registered as a micro-business (UMKM).
- VAT (PPN) of 11%: If you sell products or services in Indonesia.
Double taxation and agreements with Bali
Indonesia has signed over 70 double taxation agreements with various countries designed to prevent a digital nomad from paying taxes twice, both in Bali and in their home country. Some of these countries are:
- Countries with a double taxation treaty with Bali: Spain, Mexico, Colombia, Argentina, Chile, Peru, the United States, Germany, France, Australia, the United Kingdom, and the Netherlands.
The benefits of having your country’s government sign this agreement with Indonesia mean that you can obtain tax credits or partial exemptions on your taxes in this country. We recommend keeping your tax payment receipts from your home country to justify this.
Where can I get advice before paying taxes as a digital nomad in Bali?
We recommend that you consult, at least the first time, a specialized tax advisor for digital nomads in Bali, as the situation for this sector may change with the upcoming activation of the new digital nomad visa.
These advisors are familiar with the local regulations on the island, international treaties, current temporary visas and are up to date with the changes that the Indonesian government may apply. Here’s more information about some of them:
| Consultancy | Features |
|---|---|
| Seven Stones Indonesia | Experience with visas, residency, and taxes for foreigners. They offer personalized legal and tax advice. |
| Cekindo | Business and tax advice for expatriates and entrepreneurs. They offer online services in English. |
| Bali Expat Services | Local company assisting digital nomads with visas, taxes, and registration with Indonesian authorities. |
| Emerhub Indonesia | Regional consultancy offering solutions for expatriates and freelancers in Asia. They have accountants and tax advisors. |
| Moores Rowland Indonesia | Specialized in international taxation and tax planning for foreigners. They offer online advisory services. |
Main advisors for digital nomads’ taxes in Bali.
How to connect to the internet as a digital nomad in Bali
Although the island has good infrastructure in cities like Canggu, Ubud, or Seminyak, connectivity can fail in rural areas and during the rainy season.
For a digital nomad in Bali, this is crucial as the main tool for their work is the internet. For this reason, Holafly’s new monthly plans are the best solution, guaranteeing that you can work efficiently, quickly, and safely from anywhere on the island and in more than 170 destinations with the same eSIM.
Do you know about the unlimited plan? Enjoy all the data you need, 5G coverage, and the ability to connect to two devices simultaneously for $50.50 per month without long-term contracts.
Important: If you are a frequent traveler and want to stay connected without worrying about expensive roaming or looking for a new SIM at every destination, Holafly’s subscription plans are for you. With a single eSIM, enjoy internet in more than 160 countries for a fixed price and no surprises on your bill. Travel without limits and connect easily and securely! 🚀🌍
On the other hand, for short stays, you can also purchase the eSIM for Balifrom Holafly, with unlimited data only for the days you need.
Real case: Paying taxes as a digital nomad in Bali
We’d like to tell you about the case of Carlos Eduardo, an Argentine web developer who, after researching the best accommodation options in Bali, moved to the island in 2023 with a B211A visa, which he renewed several times to stay almost a year working remotely for his clients in Latin America.
Once he exceeded the 183-day threshold, he became a tax resident and shares with us the steps he took, assisted by a specialized advisor:
- He registered with the Directorate General of Taxes (DJP) and applied for his NPWP (Taxpayer Identification Number).
- With the help of an advisor, he submitted his annual tax return on the DJP portal, completing the SPT Tahunan form for individuals.
- He applied the double taxation treaty between Argentina and Indonesia, which allowed him to avoid double taxation.
Frequently Asked Questions about taxes for digital nomads in Bali
You’ll only need to pay taxes if you reside for more than 183 days and become a tax resident. In that case, you’ll have to declare your worldwide income.
It’s the tax identification number in Indonesia. You need to request it through the Directorate General of Taxes (DJP) and it is mandatory if you’re a tax resident or have income generated in the country.
You need to submit the SPT Tahunan Orang Pribadi form, which is for individuals.
Failing to meet your obligations can result in fines, sanctions, and even migration issues that may prevent you from obtaining a visa.
If you’re a tax resident, you can deduct some expenses as long as they are related to your professional activity: Tech equipment, coworking space rent, internet connection, and other operational costs. To do this, you must keep invoices for each purchase or expense you make.
You can stay on the island for less than 183 days in a single year. If you don’t exceed this period, you won’t be considered a tax resident and, therefore, you won’t be required to pay taxes in Bali.
