Mirella Pandjaitan
Aug 23, 2025
How's life in Indonesia so far? Great? Awareness is key, and this includes your future in this tropical paradise. Because if you're living, working, investing, or even semi-retired in Indonesia, what's happening behind government desks directly affects you.
The unpleasant air is not merely affected by the extreme weather crashing out these days. The Indonesian government is tightening its grip on foreign workers and business owners — and it's turning into the real deal, not just talk. Indonesia is connecting the dots—hard—and building a united front to enforce the rules between Immigration, the Investment Coordinating Board (BKPM), and the Tax Office.
Introducing: The “One System” Era
Gone are the days for expats navigating between government departments with relative ease. Immigration didn’t always talk to BKPM. The Tax Office rarely raised questions about foreign-owned business structures.
Not anymore. Now, these agencies are synced. Databases are shared. Cross-checking is in full swing.
It goes beyond visa renewals and filing taxes; the government is now using an integrated system to spot inconsistencies across multiple agencies. Anything deemed off for someone earning, investing, or staying long-term will be detected.
Work permit? They’ll confirm your employer is reporting your income and taxes correctly. Own a PMA company? They’ll check you’re meeting the investment and employment requirements. Paying taxes (or not)? They’ll match that data with your visa, work permit, and even your bank activity. Playing games with numbers? If your salary doesn’t match your reported income—or your business filings tell one story while your lifestyle tells another—you could face fines, inspections, or worse, deportation.
Staying compliant
Some common expat mistakes are now getting serious attention:
- Running a business without the right permit: If you’re operating under a spouse-sponsored KITAS but actively managing a PMA, you’re not in the clear without an IMTA (work permit).
- Freelancing on tourist visas: Earning income from Indonesian clients while holding a social or tourist visa? That’s a legal grey area you don’t want to test.
- Mismatch between role and permit: If your RPTKA (expat manpower plan) says "Content Manager" but you’re running operations, expect closer scrutiny.
- Tax evasion is under the limelight: Spending more than 183 days a year in Indonesia is equivalent to being a tax resident, and that means global income is taxable. Yet many expats still skip registering for an NPWP (tax ID), thinking no report means no trouble.
- Regular international transfers to Indonesian accounts: Those are now red-flagged as there's banking oversight.
- Holding land via nominee agreements: If there’s undeclared income while you hold land via nominee agreements, then you could be at risk. The government is implementing property ownership reviews.
- Residency checks: Even if your income’s overseas while simultaneously having a passport declaring that you've effectively lived in Indonesia, tax obligations remain to apply.
Nobody wants issues. Thus, be sure to register for an NPWP if you meet the 183-day rule, regardless how small or grandeur your tax bill amounts to. Then, declare foreign income properly. Indonesia has tax treaties that can help you avoid double taxation, but you must file correctly. Too much hassle can be avoided by hiring a qualified tax consultant, especially one experienced with expat cases.
Safeguarding your business
BKPM and the Tax Office are now laser-focused on PMA companies. Steer clear from assumptions of going undetected when the basic requirements aren't meant.
Failing to meet the Rp10 billion (US$640,000) minimum capital investment, zero revenue filings or dormant business activity, not hiring enough Indonesian staff (as per manpower laws), and obtaining work permits that don’t match your actual foreign workforce are trigger points to an audit.
Thus, review your PMA structure by ensuring compliance with all investment, employment, and tax regulations. Remember to stay up to date with filings, even if business is slow! Don’t skip tax or operational reports. Lastly, adhere to manpower laws by hiring locals as it’s a key requirement.
Slipping up in any case comes with consequences. You can be fined or receive a warning from minor issues such as having the wrong visa and missing documents. Larger fines, temporary suspensions, or business restrictions may occur over moderate violations such as underreported taxes and mismatched job roles. Meanwhile, serious breaches, namely fraud, tax evasion, and illegal work will come with deportation, blacklisting, or criminal charges.
A checklist to get it right
The rules are changing. But don't panic nor be complacent either. Simply follow this checklist below:
- Review your visa and work permit status;
- Check your tax filings and whether you need an NPWP;
- Update your job title with BKPM given that your responsibilities have changed;
- Don’t assume online work is invisible until the Digital Nomad Visa is officially running;
- Ensure your business structure is fully compliant to a legal or tax advisor if you’re unsure.