Investor Income & the Double Tax Treaty between Indonesia & Australia

Tax obligations is one of the most common questions we are asked about by our investors, and we are happy to provide the most updated and thorough information. First and foremost, investors should know that for all rental income received in Indonesia, you are obligated to pay tax to Indonesia, and then as well as in Australia (or your home country). However, there is a long-standing treaty between Indonesia and Australia that benefits investors, preventing double taxation on the income when reporting to both countries.

You can read the treaty here. Download PDF: Double Taxation Avoidance Agreement between Indonesia and Australia

We have also broken it down for you below. Understanding the key elements of this treaty is essential for making informed investment decisions and ensuring compliance with both Indonesian and Australian tax laws.

Double Taxation Avoidance Agreement between Indonesia and Australia

The treaty between Indonesia and Australia is designed to help investors avoid paying taxes twice—once in Indonesia and once in Australia. This agreement is particularly important for Australian property investors who are considering or already investing in Bali.

We have summed up the items within the treaty that pertain to property investors:

No Double Taxation: Normally, if you earn money from property in Bali, you have to pay tax on that income both in Indonesia and Australia. This treaty ensures you only pay tax once, with the amount paid in Indonesia credited against what you owe in Australia. This can save you a lot of money and hassle.

Where You Pay Tax: If you make money from renting out property, selling property, or other activities related to real estate in Bali, Indonesia will tax that income. This is because the property is located in Indonesia. However, the treaty ensures that Australia will not tax you again on the same income, as long as you’ve already paid Indonesian taxes.

Transparency and Compliance: The treaty requires Indonesia and Australia to share information about your earnings. This means both countries will know about your income from Bali, so it’s important to report everything accurately to avoid legal issues.

“This treaty between Indonesia and Australia is designed to simplify the tax process for Australian investors in Bali,” says Mark Reed. “By understanding these key points, we help our investors not only be compliant with tax laws, but also to and keep more of your hard-earned money.”

If you’re planning to invest in Bali, talk to our team and we can also connect you with a tax expert who understands both Australian and Indonesian laws to make sure you’re fully covered and taking advantage of the benefits the treaty offers.