Bali Tax in 2026: Living in Indonesia and Paying 0% Legally
Indonesia taxes residents up to 35% and companies 22%. When you become resident without 183 days, why an offshore company alone fails, and the Dubai or Cyprus setup that works.
Bali is Indonesia for tax, and Indonesia taxes its residents on their worldwide income at up to 35%. The top rate starts at IDR 5 billion, about $285,000, so for a business owner it is the rate on most of the profit. A company run from Indonesia pays 22%. And you can be tax resident there long before you have spent 183 days in the country.
You can still live in Bali full time and pay close to 0% on your business income, legally. It takes a company with real substance in another country, a salary you declare in Indonesia, and a clear line between what the company earns and what you take out. It is for business owners and investors earning enough that the difference between 35% and 9% is real money.
- Personal income tax
- 5% to 35%, worldwide income
- Top rate from
- IDR 5bn, about $285,000
- Corporate tax
- 22%
- Tax residency
- 183 days, or less with a home and a long permit
- Foreign dividends
- Up to 35%, unless reinvested in Indonesia
- Controlled foreign companies
- Passive income only
- Dubai company
- 0% to AED 375,000, then 9%
- Cyprus company
- 15%
When Indonesia makes you tax resident
Bali has no tax rules of its own. The national rules apply, and since December 2025 they are set out in a regulation from the tax office, PER-23/PJ/2025, which also says what counts as proof.
You are resident, Indonesian or foreign, if any one of 3 things is true:
- You are in Indonesia more than 183 days in any 12 months. The days do not have to be continuous, and part of a day counts as a full day.
- You reside there. A place you own, rent, or simply have available to use, or the centre of your personal, social or financial life. There is no day count attached to this test.
- You are there in a tax year intending to reside. The regulation lists the evidence: a residence permit valid for more than 183 days, a lease of more than 183 days, a work contract of more than 183 days, or your family relocating with you.
In practice: if you move to Bali on a long-stay permit and sign a 1-year lease on a villa, you can be tax resident from the day you arrive. The 183 days are one way in, not a safe limit to stay under.
What a resident pays
Once you are resident, Indonesia taxes your worldwide income: clients in the US or Europe, your online business, your investments.
| Item | Cost |
|---|---|
| Up to IDR 60m | 5% |
| IDR 60m to 250m | 15% |
| IDR 250m to 500m | 25% |
| IDR 500m to 5bn | 30% |
| Above IDR 5bnAbout $285,000 | 35% |
An Indonesian company pays 22% on what it earns, wherever in the world it earns it. If you hold a US passport, none of this removes your US tax either, because the US taxes its citizens wherever they live.
The visa does not decide your tax
The permit made for working remotely for a business outside Indonesia is the remote worker visa, E33G. It runs up to 1 year, needs an employment contract with a company outside Indonesia and an income of $60,000 a year, and does not allow work for Indonesian clients. Working on a tourist visa is what the immigration raids target. But a visa decides whether you can stay, not how you are taxed, and no rule exempts remote worker visa holders from tax on foreign income. A permit valid for more than 183 days is itself on the list of evidence that you intend to reside.
Why ignoring it does not work
Plenty of people in Bali run everything through a US LLC or a company offshore and assume Indonesia will never ask. That was close to true for a while. It is getting less true every year.
Enforcement has started on the immigration side
On 15 April 2026 the Director General of Immigration launched a task force in Bali, Dharma Dewata, with about 100 officers patrolling Canggu, Ubud, Seminyak and Uluwatu. It detained 62 foreigners in its first 3 weeks, and Bali's immigration office deported 342 foreigners between January and June 2026. This is an immigration crackdown. No tax campaign has been announced, but the data a tax campaign would need is already shared.
The tax office already has the data
- A tax number is easy to get. A foreigner registers online in the tax office's Coretax system with a passport copy. A residence permit is not required, and the passport is checked against the immigration records.
- Tax and immigration share data. The tax office and the immigration service have an agreement covering visas, residence permits and the dates you enter and leave the country.
- The rules were rewritten in December 2025 to name your permit and your lease as evidence that you live there.
It catches up with you elsewhere
Even if nobody in Indonesia ever asks, someone else will. A bank asks where you are tax resident when you open an account. The next country you move to can ask where you paid tax before. If the honest answer is that you lived in Bali for 3 years and paid tax nowhere, you have nothing to show them, and that is not a structure. It is unpaid tax.
Why an offshore company on its own is not enough
3 rules decide where a company's profit is taxed, and most countries have a version of all 3. Registering a company abroad does not get you past any of them.
1. Where the company is managed
A company is taxed where it is actually run, not where it is registered. Under PER-23/PJ/2025 a company is Indonesian if its head office, its central administration or its finance sits in Indonesia, or if its strategic decisions on investment or operations are made there. The regulation names the decisions that count:
- transferring shares, or assets in exchange for shares
- transferring or using the company's strategic assets
- appointing or dismissing the managers, staff or agents who run it
- supervising and controlling dividend payments
It is decided on the facts. Say you run an agency from a villa in Canggu, your clients are in the US and Europe, and the money lands in a company registered abroad. That company is Indonesian, and it pays 22% on everything it earns. You do not file anything to make that happen.
The tax treaty between Indonesia and the UAE does not settle it either. For a company claimed by both countries, it only says the 2 tax authorities will try to agree, looking at where the company is effectively managed. There is no automatic answer in your favour.
2. Permanent establishment
Even where the company is not Indonesian, work done for it from Indonesia can give it a taxable presence there, and the profit from that work is taxed in Indonesia. A place of management counts. Under the UAE treaty, so do services provided through people in Indonesia for more than 6 months.
3. Controlled foreign company rules
Many countries tax you on the profit of a foreign company you control, even if it never pays you anything. Indonesia's version is narrower. Since 2019 it covers only passive income, such as interest, dividends, royalties and rent, in a company you own at least 50% of. Profit from trading is not caught.
Why a US LLC does not help
A US LLC owned by a non-American pays no US tax, so the US–Indonesia treaty does not treat it as American, and nothing stands between it and Indonesia's own rules. Run it from Bali and Indonesia taxes it, either as a company managed from Indonesia or as your own income. More on how the LLC is taxed for non-residents in our guide to the US LLC.
How the setup works
You and your company are 2 separate taxpayers. If the company has real substance in another country, its tax and yours separate: the company is taxed where it is actually run, and you are taxed in Indonesia on what you pay yourself.
With clients we normally do this with a company in Dubai, or in Cyprus where the business should sit inside the EU and the rate is 15%. In some cases a trust sits above the company, so you do not hold the shares personally. Which one fits depends on the business and on you.
| Compared | Company run from Bali | Company with substance in Dubai |
|---|---|---|
| Where it is tax resident | Indonesia | UAE |
| Corporate tax | 22% | 0% to AED 375,000, then 9% |
| Tax on $1m profit kept in the company | $220,000 | About $81,000 |
| Your salary | Taxed in Indonesia | Taxed in Indonesia |
| Dividends to you in Bali | 10% final | Up to 35%, unless reinvested |
The company
A UAE company pays 0% on the first AED 375,000 of profit, about $102,000, and 9% on everything above it. On $1m of profit it pays about $81,000, just over 8%, and the effective rate never goes above 9%. An Indonesian company would pay $220,000 on the same profit. If what the business sells qualifies for the free zone rate, the company pays 0%, but that is a short list of activities, which we cover in our guide to tax in Dubai.
Your salary
The company pays you a salary, say $2,000 a month. That is your income in Indonesia: you get a tax number, file a return and pay tax on it. After the personal allowance of IDR 54m for a single person, that comes to around $3,400 a year. The company files in Dubai, you file in Indonesia, and everything is on the record.
If you are on the remote worker visa, check the salary against its income requirement of $60,000 a year. $2,000 a month does not meet it on its own.
The profit you leave in the company
While it stays in the company, Indonesia does not tax it, because its controlled foreign company rule only reaches passive income. Trading profit sits in Dubai at 9%. Investment income the company earns, such as interest or dividends, is different, because that is exactly what the rule reaches.
Dividends while you live in Bali
Dividends from a foreign company to an Indonesian resident are taxed at the normal rates, up to 35%. The exception is money reinvested in Indonesia, in government bonds, bank deposits, Indonesian companies or property, and held there for at least 3 tax years. For a company that is not listed, at least 30% of its after-tax profit has to go in, and only the part that is reinvested is exempt.
That is why the saving is on the profit you keep in the company. Paid out in full as dividends to a Bali resident, a Dubai company can end up costing more than an Indonesian one, whose dividends carry a 10% final tax.
The substance it needs
Substance decides whether any of it works. A company in Dubai is not taxed only in Dubai because it was registered there. It has to be verifiably run from there, so that if Indonesia ever asks, the answer is already on file and it is true.
- 01
A real office with people in it
Staff in Dubai doing the work of the business, in proportion to what the company actually does. - 02
Someone in Dubai with real authority
A director or manager who makes the decisions for the business, the strategic ones included. - 03
Decisions taken in Dubai
Board meetings held there and the big decisions made there, which can mean you travelling to Dubai regularly to make them yourself. - 04
Your own role from Bali kept to owner
If you close the deals or do the client work from Bali month after month, the company can have a taxable presence in Indonesia anyway.
How much of this you need depends on the business. A company of 2 people needs less than a company of 50, but the substance has to match what it actually does. The setup puts the running of the business in Dubai, and you stay the owner.
Dubai itself has changed in 2026, with the war in the region and the fighting that started again in August. If that weighs on where the company should sit, our alternatives to Dubai covers the other options.
Questions
Do I pay tax in Bali as a foreigner?
If you are tax resident in Indonesia, yes, on your worldwide income at up to 35%. Being a foreigner does not change that. If you are not resident, Indonesia only taxes income from Indonesian sources.
Can I stay under 183 days and avoid Indonesian tax residency?
Not reliably. The 183 days are only one test. You can also be resident if you have a home available to you there or the centre of your life is there, or if you are there intending to stay, and a permit or lease of more than 183 days is listed as evidence of that.
Does the remote worker visa (E33G) mean I pay no tax in Indonesia?
No. It is an immigration permit. It lets you live in Indonesia while working for a company abroad, but no rule exempts its holders' foreign income, and a permit valid for more than 183 days is evidence that you intend to reside.
Can I live in Bali with a US LLC and pay no tax?
No. An LLC owned by a non-American pays no US tax, so no treaty protects it. Run from Bali, Indonesia taxes it either as a company managed from Indonesia at 22% or as your own income at up to 35%.
Can a foreigner get an Indonesian tax number (NPWP)?
Yes. You register online in the tax office's Coretax system with a copy of your passport. A residence permit is not a required attachment.
What about Indonesia's 4-year rule for foreigners?
It taxes certain foreign workers only on Indonesian income for 4 years, but it applies to employees in designated roles with science, technology or maths expertise, needs an application, and is lost if you use a treaty. It is not a route for someone running their own foreign company.
Is there an exit tax when I leave Indonesia?
As at September 2026 Indonesia has no exit tax for individuals. Once you are no longer resident, it only taxes income from Indonesian sources.
Who this is right for
You can live in Bali full time and legally pay close to 0% on your business income. It works for a business owner whose company can actually be run from somewhere else, who is happy to pay Indonesian tax on a modest salary, and who keeps most of the profit in the company. It does not work if you are the business and every decision happens at your desk in Canggu.
If Bali is the lifestyle you want but not a must, our list of the best places to live for entrepreneurs compares the alternatives. If you are running a business at 7, 8 or 9 figures, or you are a high-net-worth individual, book a consultation and we will go through your situation and tell you whether this could work for you.
