Last time, I wrote about the tax implications for expatriate employees when they return home temporarily, but what kind of preparations and procedures are required when it is decided to return home permanently? This time, we will explain how to pay taxes, final tax return, and erase your taxpayer identification number for the difference between returning to your home country.

1. Tax payment in the year of return

Even if you decide to return to work in the middle of the year, you are still liable to pay taxes in the year of your return, and you are responsible for declaring and paying taxes on your income for the period up to your return. In addition, even if you are staying in Indonesia for less than one year, if you stay in Indonesia for more than 183 days within a 12-month period, you will be required to pay taxes, so you will need to declare your income until you return to your country. Please note that the 183 days are not calculated from January 1st, but from the past 12 months.

2. Tax return for the year of return

When filing a tax return for the year you return home, your worldwide income up to the date you were a resident of Indonesia is subject to filing, and the filing deadline and tax payment deadline are the same as regular individual tax returns, by the end of March of the following year, regardless of the date of your return. In order to file a final tax return, you will need documents such as "Indonesian withholding slip (form 1721-A1)" for the period up to the end of your stay, "Japanese pay slip (income certificate)" and other "certificate of income" if you have any. In addition, the tax amount determined by the final tax return will be the basis for calculating the next year's prepaid income tax (PPH25), but if you have completed the procedures to make your taxpayer identification number dormant as described below by the time you file your final tax return, you will not be obligated to pay the next year's prepaid income tax (PPH25).

3. Cancellation of taxpayer identification number (NPWP)

The Taxpayer Number (NPWP) registered while stationed in Indonesia is the number required for tax filing. Keeping your tax identification number registered indicates your intention to be an Indonesian taxpayer. Those returning to work will no longer be residents and will no longer be required to pay taxes, so they will need to complete the procedure to delete their tax identification number. The procedure for deregistering a taxpayer identification number usually takes about 6 months, so if you have paid prepaid income tax (PPH25) in the year you return to work, it is important to first make your tax identification number dormant by submitting documents to the tax office, thereby suspending your tax obligations and stopping payment of prepaid income tax. The purpose of this is to stop prepaid income tax payments early, thereby preventing prepaid income taxes from exceeding the final tax amount in the year you return to work, resulting in a tax surplus. This procedure will take approximately one week. After completing the final tax return and payment, we will begin the registration cancellation procedure. The registration cancellation procedure may involve a tax investigation, in which case the taxpayer identification number will be canceled after the investigation is completed.

Related laws: Pasal 3 Paragraph (3) of UU KUP No. 28 Year 2007 (reporting period)
Chapter 1 Paragraph (6) of the KUP Law (NPWP)