Now, on November 2, 2020, the omnibus law was approved by the president and came into effect. Violent demonstrations were reported before and after its enactment, leading to the impression that it was an employment and labor-related law, but the omnibus law also includes amendments and additional laws related to taxation. The income tax reform includes exceptions to taxation for foreign taxpayers residing in Indonesia and Indonesian taxpayers residing abroad. This is why there were whispers in advance that ``Once the Omnibus Law comes into effect, you only need to declare your Indonesian salary.'' What is the reality? Indeed, there is an article that states that ``Foreigners who meet certain requirements will be taxed only on their domestic income in Indonesia.'' So, does this mean that the worldwide income that has been taxed in the personal tax return in previous years will be freed from taxation, and if it is a Japanese expatriate, only the salary from the Indonesia company will be taxed? First, let's take a look at the requirements for eligible foreign taxpayers. There are two certain requirements.
① Possess specific skills (details of skills will be determined in the future by Minister of Finance ordinance),
②You must have been a taxpayer in Indonesia for less than 4 years. We will have to wait for a ministerial ordinance for the details of the skills, but we believe that there will be a certain number of people who meet the requirements.
The next check point is what is "Indonesian domestic income".

This provision also includes payments made based on work or provision of services within Indonesia, as well as income received outside Indonesia. It is stipulated that So, what will happen to their salaries in Japan? The salaries that many expatriates receive in Japan are likely to be paid in Japan as compensation for their work in Indonesia (including in the case of salary supplements), so in that case, it will fall under the category of Indonesian domestic income. From the above, it can be concluded that Japanese expatriates who meet certain requirements are subject to taxation, including wages paid in Japan as compensation for working in Indonesia. However, there is a right to be subject to taxation only on Indonesian domestic income rather than worldwide income, so for those who have income from overseas sources, such as real estate income in Japan, there is an advantage that the taxation in Indonesia will be narrowed. Other amendments include a reduction in the PPH26 tax rate when paying interest overseas (currently 20%), tax exemption for domestic dividends, and conditional tax exemption for dividends from overseas. Many of the detailed requirements will be left to ministerial ordinances that will be enacted in the future, so we have only communicated what is currently clear. We will continue to provide information as detailed regulations are enacted. Other amendments include a reduction in the PPH26 tax rate when paying interest overseas (currently 20%), tax exemption for domestic dividends, and conditional tax exemption for dividends from overseas. Many of the detailed requirements will be left to ministerial ordinances that will be enacted in the future, so we have only communicated what is currently clear. We will continue to provide information as detailed regulations are enacted.

Related laws and regulations: UU 11 Year 2020 Tentang Cipta Kerja (Omnibus method) Pasal 111