Paying a villa manager based outside Indonesia: withholding, treaties and VAT

Some Bali villas are managed by companies registered abroad — in Australia, Singapore or elsewhere — with the owner or the owner's company paying the fee out of Indonesian revenue. That fee is Indonesian-source income of a non-resident, and Indonesian law puts the collection duty on the payer. This page reads the income tax law as restated in 2023, the 2025 treaty regulation, the VAT law and the 2024 administration regulation. Fees paid to an Indonesian manager are a different regime.

Seven words in a cross-border fee

The terms in the tax laws and on the forms.

Withholding: 20% unless a treaty says otherwise

UU PPh Pasal 26(1), as restated in 2023: income including “imbalan sehubungan dengan jasa, pekerjaan, dan kegiatan” — fees for services, work and activities — paid by a government body, a resident taxpayer, an event organiser, a permanent establishment or a foreign company's representative to a non-resident without a permanent establishment here is withheld at 20% of the gross by the payer. It is final (ayat (5)). The payer deposits it by the 15th of the following month and reports within 20 days after the month (PMK 81/2024 Pasal 94, 171).

Who the payer is

A PT PMA paying the fee is a resident taxpayer and a withholder. An individual owner who is tax-resident is also within “resident taxpayer” in the statute; we found no provision limiting Pasal 26 withholding by individuals to those specifically appointed. If the foreign manager is an individual, the 2023 withholding regulation for payments to individuals applies, and it exempts only certain employers. Whether a villa owner letting a villa is “doing business” for those exemptions is not answered by the texts.

Treaty relief, and when the manager becomes taxable here

The DGT Form

A non-resident gets treaty treatment if it is not an Indonesian resident, is a resident of the treaty partner and does not abuse the treaty (PMK 112/2025 Pasal 2(4)), shown by a DGT Form certified by the partner's competent authority (Pasal 2(3)(b)). The certification can be replaced by an English certificate of domicile showing the name, issue date and official's signature (Pasal 9). The non-resident hands the form to the payer; it is valid up to 12 months (Pasal 8). The payer uploads it through the taxpayer portal and withholds according to the treaty; if the conditions are not met, it withholds under the Income Tax Law — 20% (Pasal 10). Even when nothing is withheld, the payer reports and issues a withholding slip (Pasal 14(2)); over-withheld tax can be reclaimed (Pasal 15). Which treaty article covers a management fee, and whether it leaves the right to tax with Indonesia, depends on the treaty.

When the foreign manager becomes taxable here

A permanent establishment includes services of any kind by employees or others in Indonesia for more than 60 days in 12 months, and a person or entity acting as a dependent agent (UU PPh Pasal 2(5)(m)-(n)). A foreign manager whose staff run the villa on the ground, or who acts through a local agent bound to it, is then taxed in Indonesia as a permanent establishment rather than through Pasal 26 withholding. A treaty can set a different time threshold (PMK 112/2025 Pasal 2(6)(d)). Running a villa business also needs the Indonesian licenses the villa itself holds. License codes for management.

VAT: self-assessed by the payer

Using taxable services from outside the customs area inside Indonesia is a VAT event (UU PPN Pasal 4(1)(e)), and any individual or entity using them must collect, pay and report the VAT itself (Pasal 3A(3)). The rate is 12%, applied to 11/12 of the fee — 11% effective (PMK 131/2024 Pasal 3). Payment is due by the 15th of the following month; for a payer that is not a VAT-registered business, a validated payment counts as the report (PMK 81/2024 Pasal 94, 172). The villa's own income is different: hotel services that are a regional-tax object are outside VAT (UU PPN Pasal 4A(3)(l)), and the villa charges hotel tax instead. Hotel tax filing.

What this page does not cover

• What any particular tax treaty says about management fees.
• Transfer pricing where owner and manager are related.
• Tax in the manager's home country.

Common questions