Reviewing the Salaries of Expatriate Staffs

Starting 11 August 2010, the government can now review the amount of the incomes received by expatriate staff (resident individual taxpayers) of an   employer that treats all or part of the said income as costs or outlays incurred in connection with the provision of technical, management or other services to the foreign firm. In reviewing the amount of such incomes, the tax authority will continue to apply the test of reasonableness in respect of the incomes received by expatriate staff by combining the total income received in Indonesia and the total income received overseas. If after being reviewed, there appears to be a difference, then the amount of this difference must not exceed the amount of the costs or other outlays borne or paid for by the employer to its overseas-based affiliate.  In   respect of incomes that have been reviewed, these shall be subsequently treated as the basis for the deduction of article 21 and/or article 26 income tax. Another method that may be employed is to review the amount of income of an individual taxpayer based on the expatriate salary standards. Legal basis:  Minister of Finance Regulation No. 139/PMK.03/2010 dated 11 August 2010