Do You Want to Live in Bali and Not Pay Taxes?
I know why you’re here, and it’s likely that you’re considering changing your residency to another country, if you haven’t already done so.
When discussing this idea with friends and family, you’ve probably heard comments like, “There’s no place like Spain” or “Spain has the best healthcare in the world. What will you do if something happens abroad?”
Well, contrary to popular belief, living in a place with low taxes and a high quality of life is entirely possible. In fact, when reviewing the rankings of the best countries with healthcare systems worldwide, we find that countries like Singapore, Switzerland, or Saudi Arabia traditionally have low taxes and excellent healthcare systems. Moreover, Spain is in a similar position to Argentina or other countries like Uruguay, which are not exactly top-tier either.
We work with dozens of clients monthly, and it’s well known that many nomads prefer to move to low-tax countries. There, they either take out private insurance or enjoy the public healthcare of the destination country, saving themselves thousands of euros in taxes each year.
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Live in Bali Without Paying Taxes: Options
One of the countries our clients frequently inquire about is Indonesia, particularly Bali. Many of our clients want to pay 0% taxes while living in this paradise, but is this possible? What challenges will you face with this change of residence? How will your cryptocurrencies be taxed if you move your residence to Bali? What are the risks of living in Bali without paying taxes?
Let’s explore your options for moving to Bali, whether it is suitable for citizens from all over the world, and most importantly, what happens with taxes if you move there.
Live in Bali & Residence Visas
When moving to a new country, the first thing we do is test the waters: spend a vacation there or even a few months working as digital nomads. But once we are sure we want to live in that country, the next step is to obtain a long-stay visa that allows us to avoid constant visits to immigration offices to renew our residence visas.
Permanent Residence Visa for Living in Bali
In this regard, it is important to understand that you can come to live in Bali and obtain a residence permit in just 2 months, and you can do it online. After living in Bali for 5 years, you will be eligible for a permanent residence permit issued for another 5 years.
Therefore, once you arrive in Indonesia, there are no immediate options to obtain a permanent residence permit in Indonesia, which is officially called KITAP. To apply for it, you need to live in Bali for at least 5 years or marry an Indonesian citizen and stay there for at least 2 years.
Why is having a permanent residence permit important for some people? Because the temporary residence permit is issued only for 6 or 12 months and must be constantly renewed. Additionally, only people with permanent residence are eligible to apply for citizenship.
So, let’s see who can obtain a temporary residence permit to live in Bali and, most importantly, what requirements they must meet.
Temporary Residence Visas for Living in Bali
1. KITAS for Business Investments
With this visa, you need to invest at least IDR 1 billion (approx. USD 70,000) in an Indonesian company. The company’s share capital must be at least IDR 10 billion (approx. USD 630,000).
This visa will be issued for 1 or 2 years and must be renewed thereafter.
2. The “Golden Visa”
Available since mid-2023, this visa requires you to meet one of the following options:
- First Option: Buy bonds, stocks of publicly listed companies, or open a bank account with an amount between USD 350,000 and USD 700,000.
- Second Option: Start a company valued between USD 2.5 million and USD 5 million.
- Third Option: Invest in a company with a value between USD 25 million and USD 50 million.
3. My Second Home Visa
This long-term residence visa is issued for 5 years and can be renewed for another 5 years. To qualify, you need to:
- Confirm ownership of real estate in Indonesia valued at over USD 313,000 or
- Open a bank account in an Indonesian state bank with a deposit of USD 130,000.
Other Types of Visas
While there are other visa options, they are not ideal for long-term planning to live in Bali. These include:
- Freelance KITAS: Allows 53 listed professions to work from Indonesia. The visa is issued for only 6 months and must be renewed.
- Working KITAS: Requires employment by a registered Indonesian company. The visa is issued for 1 year.
- Family Reunification KITAS.
- Student KITAS.
- Retirement KITAS.
How to Live in Bali as a Digital Nomad?
You might be wondering, with such inaccessible requirements as mentioned earlier, what about digital nomads who don’t have a lot of money and can’t afford to invest in Bali?
Well, there are several cases here…
We know that in Bali there are various agencies that offer the following scheme: you create a company in Bali with little initial capital. Then, the company takes out a loan to meet the necessary capital and investment requirements to obtain a KITAS visa…
The problem is that the company will never be able to fully repay these loans. Although this scheme has worked for some time due to corruption in the country, we have heard of several cases where people who invested in this system were left completely unprotected. Therefore, we do not recommend it.
B211A Visa for Temporary Living in Bali
Another option that nomads with little capital use is to opt for the B211A tourist visa (also called a digital nomad visa) which is issued for 2 months and can be extended twice for the same term.
Then you can apply for a new B211A visa even without leaving the country. So, you would practically have to go through all the immigration procedures every two months, which is quite a hassle, of course. And you might wonder, if I always live in Bali on a tourist visa, what will happen with taxes?
By law, anyone who spends 183 days in Indonesia must pay taxes there. However, since the visa is issued for only 60 days, most people prefer not to comply with this rule, and for now, Indonesian tax authorities generally do not prosecute foreigners due to a lack of resources. So, as a tourist, you simply do not register as a tax resident in Bali and, of course, do not pay taxes there.
Tax Residency for Living in Bali
With this approach, there is always a possibility that Indonesian tax authorities might audit you, and if you are found to have violated the law, you could be expelled from the country or even fined. There is an even more likely outcome, especially if you are moving from a high-tax country like Spain, Argentina, or Mexico. These countries typically do not let their tax residents leave so easily.
Since you would not be registered as a tax resident in Bali, you would not be able to prove that you are no longer a tax resident in your previous country of residence. Therefore, you would have to continue paying taxes there.
The issue here is that if you do not pay taxes in Bali, you will not be able to obtain tax residency to open bank accounts, legalize your tax declarations, etc. So, what can you do to have your money legally?
Well, you can simply obtain tax residency in a country that allows it quickly, such as Paraguay, Cyprus, or the UAE in your second year, and then live in Bali for no more than 6 consecutive months. After that, you can move to another Southeast Asian country. This is also a good option, right?
Taxes as a Tax Resident in Bali
However, let’s continue with the example where you legally move to live in Bali and become a tax resident there. Here you must understand that the personal income tax rates are not low either: personal income tax ranges from 5% to 35% depending on the income you earn.
Cryptocurrency Taxes in Bali
The only real benefit I see of being a tax resident in Bali is the taxation of cryptocurrencies: since 2022, the tax on cryptocurrencies is charged at two levels:
- The capital gains tax is 0.1% if the seller is an individual and 0.2% if it is a legal entity.
- Additionally, you will have to pay VAT, which is 1.1%.
However, Indonesia is a volatile country in terms of changes to tax legislation, so I would not recommend it for this reason either.
Well, nomad, I hope this blog has been helpful to you. If you wish to prepare your tax structure with Nomad Tax, you can always contact us.
