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Digital Nomads & Remote Workers in Bali
Living the Dream
It is the dream of many, to pack bags, and come to Bali in order to leave behind the old life and settle on this beautiful island. A dream, that thousands of self-employed digital nomads and remote workers have made come true in recent years. The digital nomad life style is attractive; “working online and living on a tropical island, getting paid to a bank account outside of Indonesia, not paying any taxes, having clients from all over the world.” There are several factors that give rise to the “digital nomad phenomena” in Bali.
Bali is a favourite choice for Digital Nomads – for good reasons
Remote working for another company in general boomed because of the covid restrictions and more and more companies allow their workers, or even encourage them to work from “anywhere”. And studies show, that more and more workers are very open to the idea of breaking the chains of an office job at home and would, at least for a months per year, somewhere else, while working for their current employers. Furthermore, websites such as freelancer.com, guru.com and others, have made it much easier for freelancers to find jobs and handle projects, regardless of where they live. This lead to a rising number of “self-employed digital nomads” finally able to make a living and create a stable income.
And then there is Bali as a destination – this magical island offers a very convincing and attractive package of tropical life style, quality of live, reasonable costs of living, vibrant communities, tolerance, and millions of things to do and explore.
Amazing – but…
However, relocating to Bali and choosing the life as a self-employed digital nomad, or settling here as a remote worker, is not that simple – from fiscal and tax implications, to visa regulations and medical insurances. You will encounter enthusiastic individuals, “influencers”, communities, and dedicated websites & apps, who boldly promote the “digital nomad life” while naively or deliberately overlooking the details and potential traps that are still existing today. They make it seem, as if there are no laws to follow. That might work for a while, and for some, but this can turn into a nightmare rather quickly. “Come to Bali, get a business Visa, make money, and live a happy life?” Yes, but the problem is, that Indonesia, FOR NOW, has no real solution, legally and fiscally, for welcoming remote workers and digital nomads. It is still a grey area.
The good news is, that the government is indeed working on a solution and is working on a 5 years Visa for digital nomads and will also clarify the fiscal obligations, probably by defining that any income made OUTSIDE of Indonesia won’t be taxed. And just very recently, Sandiaga Uno, the Tourism Minister of Indonesia, has confirmed that Indonesia is working on a Visa for digital nomads.
This means, the Indonesian government is recognising that Bali could become a major hub for the “digital nomads” so to speak, and that this growing segment could greatly contribute to the Balinese economy if they manage to take this “lifestyle” out of the grey-area.
If you consider to relocate to Bali, two main pillars to build your foundation on, is the visa or residency that you hold, and understanding the tax implications that come with it.
Visas & Residency Permits
A Visa or a residency permit is always connected to 3 key questions
- Where are you from (nationality)?
- How long will you stay?
- What will you do here?
Let’s assume you are not a tourist and you wish to stay longer than 60 days. And let’s assume you are not an investor and therefore not getting an Investor KITAS (work & temporary residency permit) for 2 years. Let’s also assume you are not going to be employed by an Indonesian employer and therefore not getting an employment KITAS. Which puts you somewhat into the category of a self-employed freelancer or remote worker who would stay in Bali for several months or longer and also make an income while working for clients or a company outside of Indonesia.
The Visa that gets closest is the B211A Visa FOR BUSINESS PURPOSE, which is 60 days valid, and can be extended twice for 60 days, giving you a total of 180days, without needing to leave the country. After these 180 days, you could apply for a B211A Business Visa ONSHORE (while in Indonesia), and also extend this twice.
The B211A needs an Indonesian company as a sponsor. This company basically vouches for you AND invites you for business meetings, negotiations, to join conventions, visit the office. It’s also used for sourcing for products, talk to suppliers or your business partner here in Indonesia. therefore it is connected with the company that sponsors the Visa. Even though it’s called a business visa it does not allow you to work in Indonesia and you can not get paid in Indonesia. Particularly you cannot work for a someone in Indonesia and get paid.
It is also not a residency permit, it does not qualify for you to get a local tax number to declare taxes. Most “digital nomads & remote workers” still get this Visa, it is the best for this purpose, because it at least indicates that you are not a tourist and that there is a reason why you might sit around in a co-working space all day with the laptop in front of you.
Usually, there is no problem, at least as long as you are not asked to explain yourself in detail to an immigration officer when you arrive or get checked while you are in Bali. The authorities do not or maybe cannot control this efficiently at the moment. However, the authorities do send out immigration officials to control and check foreigners from time to time to check their visa and employment status. And lately this becomes more regular. It is therefore important to not have clients in Indonesia nor work for any company in Indonesia, because this is a direct violation, which they will not tolerate.
Paying Taxes in Bali?
As we have pointed out above, you cannot be paid in Indonesia or work with an Indonesian company as a client.
The “classic digital nomad”, works and lives in Indonesia sometimes on a tourist visa, or hopefully at least on a business visa. They offer freelance services, get paid but are not declaring any income. They don’t have a legal structure (company and tax number) and have no working permit (Investor KITAS etc). Therefore they are at risk of violating quite a few laws and regulations.
Then there is the “remote worker” who is employed officially abroad and also still works for that company while in Bali. They come to Bali for a staycation, and instead of being in a home-office they are in Bali. That’s less critical than being a self-employed digital nomad in relation to the visa status. And nobody can or does check wether these remote workers are on a long holiday or doing a sabbatical. But, also here, it’s a grey area. HR departments of the foreign companies have to follow some laws and rules in their own country that are related to sending workers abroad and what the fiscal and legal impacts are.
Income tax liability – income in Indonesia and global income
Of course, you need to make sure that your taxes are handled according to the laws where you actually still have your residency. However, regardless if you pay any taxes anywhere else outside of Indonesia you need to know that any person’s liability for Indonesian tax is determined by their residence status. And, you become technically and AUTOMATICALLY a resident in Indonesia if you stay in Indonesia for a total of more than 183 days in any 12-month period. And that can have a big impact on your income liability, because…
Residents are taxed on their global total income – regardless of where such income arises. The taxable income is like everywhere else in the world calculated after subtracting allowable deductions and personal allowances. Indonesia does have agreements with many other countries to avoid that individuals our double taxed.
Yet it is important to understand, that if you stay longer in Indonesia than 183 days over a period of 12 months, you could be asked by the officials to declare your global income.
If you click on the button below you will be guided to an article from KPMG discussing this more in detail.
The best is to get a B211A Visa and also keep a low profile. Make sure you understand the Visa restrictions and also the tax liabilities so you can take appropriate precautions not to fall into these traps, and are able to give appropriate answers to any official, who might be asking you about your visa status.
Where to stay in Bali
The strongest digital nomad communities can be found undoubtably these days in Canggu and Ubud – also Sanur and the south around Uluwatu (west coast of Bukit) become more popular due to increasing prices in Canggu and Ubud for accommodation.
Beautifully designed co-working spaces and co-living facilities can be found nowadays all over the island – and the number is growing.
Selection of the Best Co-Working Spaces in Bali
A modern coworking space in Bali provides everything you need as a digital nomad and remote worker: from private meeting rooms, complimentary coffee, gym memberships, and sometimes extend to networking and workshop events. These hubs are just the place to find like-minded people and entrepreneurs who are happily settled and lounging with laptops on their laps.
Selection of some of the Best Co-Living Places in Bali
Living in modern villas may have its perks, but lodging together with a tight-knit community is even better. Not only does a shared space motivate you to socialize, it also allows you to be able to connect and share ideas with people of different backgrounds you might have never met otherwise. Accommodation in Bali often includes weekly cleaning, fast internet, and affordable pricing.
This is what you should not do
- blindly trust other nomads or agencies telling you, that all is clear and that there is no grey area. We all hope Indonesia will come up with a “remote workers visa” and create more clarity for all the nomads out there
- get a “Fake” employment KITAS from one of the many agents. technically this type of KITAs is connected strictly to this company and the type of work they applied the KITAS for.
- get an Investor KITAS with the help of an agent, if you are not really an investor. Some agents offer this service and make you a shareholder of an existing company. But an Investor KITAS comes with restrictions AND you are liable on many levels – legally and fiscally. Not a good idea!
- work for Indonesian companies or entities without being actually employed
- get paid in Indonesia
- stay more than 183 days over a period of 12 months, if you can avoid it
- get real legal advise from a lawyer or reliable agent for any “special scenarios” that you might need to have clarified for you
- become a yoga teacher, DJ, life coach, interior designer, facilitator running retreats and workshops in Bali while getting paid. This is illegal with a B211A Visa and also triggers tax fraud, since you are not allowed to make any money here.