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Residential taxation means that you pay taxes based on where you live. Many countries use a version of the “183 days” principle. This means that if you spend at least half your time living in the country, you’re taxed on your worldwide income.

Of course, it’s rarely that simple. The majority of countries have criteria you need to fulfill in order to prove you don’t have ties to that country. Different countries will have different rules on what “ties” you to them. Some of the common ties are: a Wife (or husband), kids, real estate that you own but don’t rent, a car that you own, bank accounts you’ve set up…the list goes on.

Disqualifying yourself from residential taxation can be a bit complex, depending on the country. It’s not impossible, but it will take a thorough understanding of the residential tax laws (and some smart flag planting). The payoff is worth it. When you prove you don’t have ties to a country, you’re no longer deemed a resident. This means you no longer pay tax on your worldwide income.

http://nomadcapitalist.com/flag-theory/

Okay. So what about Indonesia. What would be required to be free from income tax in Indonesia. Would a person need to be outside 180 days in a year?

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DJP PER-43/pj/2011 is the reported new regulation; the reported residence conditions are "any individual present in Indonesia for more than 183 days in any 12-month period or any individual present in Indonesia during a tax year with the intention of residing in Indonesia". Additionally they report

An expatriate is resident until the date of final departure from Indonesia. An Indonesian national is considered resident from birth unless he/she leaves Indonesian permanently. An Indonesian national working overseas for more than 183 days in a 12-month period is also considered as non-resident. He/She will only be taxed on his/her Indonesian-source income, provided that he/she has paid income tax on his/her offshore employment earnings and she/he has official proof of overseas residence (i.e. employment pass, stamped passport, overseas residency cards, certifications from Indonesian Embassy, etc.)

180 days is not enough.

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  • So if I am a citizen of Indonesia, even if I stay 185 days a year, I am still subject to income tax unless I leaves Indonesia permanently?
    – user4234
    Oct 2, 2018 at 17:17
  • Yes, that is what that means (assuming that their reading of the regulation is correct -- I have not located an official version of the regulation).
    – user6726
    Oct 2, 2018 at 17:19
  • I wonder if all those women workers that work in Arab pay indonesian income taxes.
    – user4234
    Oct 2, 2018 at 18:13
  • I find it this is not fully representing the situation. DJP is the Directorate General office of Tax. It is under Ministry of Finance, which is under Presidential office. Indonesia has so many bilateral tax agreements with countries, which is decided between countries, approved by both President and Parliament. The judicial strength is way higher than the DJP issued decrees. So anything decided at President + Parliament level cannot be overriden by DJP. In most bilateral Tax Treaty that I know, 183 days is enough, then the habitual abode will be the next basis of the tax residency.
    – Daniel Baktiar
    Dec 27, 2019 at 10:58

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