Feb 29, 2008, 02:20
First the immigration authorities in Bali started “clamping down” on expats who basically abused holiday visas employing so called “visa runs” to illegally live on the island. Of course the immigration officers are very flexible when they clamp down as it is very profitable for them as individuals to do so; ching, ching! Of course this was previously the extremely corrupt and woefully inept police’s main tool of choice to extort money from foreigners living in Bali, but when the immigration officers moved in on their profit margins by securing special visa privaledges for many expats, the police had to move onto their second most profitable extortion method, narcotics, and expand it. So many of Bali’s expats are “dope-heads”, a testament to their IQ in a country where possession is no misdemeanor and being caught with too much can result in the death penalty. But unless someone, an aggrieved associate perhaps, substantially fingered them they could at least continue their spiritual enhancing habit in the secure knowledge the Balinese police are so bad at policing they were unlikely to get caught. Ah but then the cunning Bali POLDA (police) came up with a cunning plan to compensate for the fact their officers couldn’t catch a cold, they began to plant drugs on foreign expats in order to extort more money from them in lieu of lost earnings from visa busts; oh yes they did, the (former) Czech Consul for Bali even sent out a newsgroup warning about this.
Next came news that the hotel industry in Bali, which is basically controlled by Suharto’s family and close friends, decided that falling profitable western tourist figures against an increasing western owned villa business market share had gone far enough. Fortunately for these Javanese hoods, excuse us, business people was the fact foreigners could not legally own nor operate holiday villas in Bali, despite the fact they had stood by for years and saw a whole very, very nasty real estate industry build up telling these poor schleps they could! So then, easy enough; have the authorities clamp down on these illegal villa operations by insisting they become registered and legal when they could not, then the hotels would pick up the tourists who could no longer book into these foreign “owned” villas. Of course the authorities tried to do all of this under the feign of legitimacy but accounts of back “tax” demands amounting to more than each villa’s worth showed it was nothing to do with getting these properties legal, but rather giving foreign money trees' wallets a good self serving caning. As more and more foreigners were forced to realize they could not own property and / or run an accommodations business in Bali, despite the fact the authorities still allowed the nasty real estate masses to say they could, foreign owned villa after foreign owned villa were and still are being forced to close down.
Naturally the taxation officials and police are very flexible towards foreigners who “own” villas in Bali if they receive a “little” backhanded cash incentive to be so; the problem being there is much less profitable independent western traveler type tourism coming to the "paradise" island these days, so less cash in the villa owners’ pockets to be able to afford this flexibility. Ironically and thankfully this hotel industry and let us not forget Jack Daniels of Bali Discovery Tours (he collected the initial list of illegal foreign owned villas for the authorities) sponsored nasty, jealous act backfired on the Indonesian tourism industry. You see, villa loving westerners were quite rightly a little disgusted about what was going on and decided to give Bali a miss altogether. Some of these quite naturally so because villas and rooms owned and operated by hotel groups and the Javanese are simply not up to the standard of those which were being closed down by the nasty Balinese authorities. In fact the act has actually cost Bali’s hotels more then it gained them. Now most if not all of the so called large luxury resorts in Bali are having to offer “down to the bone” packages to Javanese and Asian guests, reducing further their standards and luster with discerning western tourists. OK, western red necks and camera clicking, breakfast table Marlboro smoking Asian package tourists think they have a good deal, but they are not earning the hotels much money and are actually further putting the fat wallets off!
As a side story we wonder just how many of the Bali expatriate cuckoo brigade, the ones that have been there so long they even have given themselves Balinese names, are really aware of what lies down the road for them! You see many of these foreign wannabe Balinese males married local girls and then bought land and houses in their wives’ names. Ooops! Unfortunately Indonesian law expressly forbids any foreigner having a claim to land title in Bali, which foreign men would have if they subsequently divorced their Balinese wives, so the way the authorities got around this problem was to forbid Indonesian women who had married a foreigner to be able to own land after the marriage. Of course western women marrying Indonesian men do not have this problem as they have no rights as women under Indonesia’s nasty Sharia based laws to anything if their husband divorces them. Some foreigners recently realizing this problem have gone to the extreme of renouncing their foreign citizenship in order to acquire Indonesian citizenship, whereby they can own land. Trouble still lurks though for those who changed their citizenship to Indonesian (you have to feel sorry for them) after they / their spouses illegally bought land. You see, the previous land owner thereby has a claim to get what they sold back, gratis, and the authorities still have such documented events to come and extort a buck or thousands from them over!
Anyway, on to the next financial (extortion) caning for the west’s finest [sic] residents on Bali; income tax! Oh dear, did no-one ever explain to them that Indonesia has some pretty draconian, of course, taxation laws? Item one; Any foreigner who is in Indonesia for a total of more then 2 months in any given 12 month period must, repeat must register for personal taxes whether or not they are actually liable to pay tax or not. Tax registration involves obtaining a “NPWP” tax number; if you fail to do this it could well mean imprisonment for a maximum of six years (that is a long time in some of the worst jails in the world) and a maximum fine of four times the total amount of tax due (or a very big extortion bung). Item two: Indonesia taxes people on their worldwide incomes, including income (interest) from overseas investments / deposit accounts and pensions. So even retired people in Bali have to do this and likely pay taxes, which is not what they expected or rather are used to, especially as NPWP requires monthly tax office reports on incomes and various other financial activities! Of course even the dumbest extorting clod in Indonesian uniform can work out foreigners that have nice things and eat out have to pay for this from somewhere, so it is going to increasingly get very hard to avoid.
So bad official news then for Bali’s expats, given expats in Jakarta likely are registered for tax, from Djoko Slamet Surjoputro the Director of tax services at the Directorate General for Taxation. According to Mr. Surjoputro only around one in five of those people in Indonesia liable to pay income tax (earnings above 1 million Rupiah per year) are registered for tax and are doing so. Like many taxation systems, Indonesia taxes higher earners a greater percentage then the lower paid. Oh dear, those expatriates on Bali who almost certainly all earn over 24,000 USD per year are liable at the maximum rate of 35% of their worldwide income. So when Mr. Surjoputro says his office plans to increase tax revenues by over 25% each year, given one big fish feeds more tax officials than many little ones, given certain Indonesians enjoy favorable unofficial status and exemptions, where oh where can Mr. Surjoputro and his army of beaurocrats known for their laziness easily find some dishonest top taxation rate dodgers? That’s right, Bali and its expats!
Oh dear, oh dear, it looks like foreigners stupid enough to have invested their money into Bali on the basis it is easy going and somehow not Indonesian are going to get yet another particularly painful wake up lesson soon that Bali is very much part of nasty Indonesia. If you intend to spend more than 2 months a year in Bali, get ready to pay income taxes there and to pay someone to report monthly accounts to the tax office for you. For the first time ever expatriates are going to have to secure and keep receipts, account for staff salaries, investment returns (onshore and offshore), assets and “perks” such as vehicle usage and provide this every 30 days or so to the Indonesian tax man! Come on Bali’s expats, tell us what you think, is Bali still a paradise?
Never mind, you can always pay some bungs and / or play the Indonesian game, if you can get away with it like some! With most of the Javanese owned hotels in Bali operating “twin book” systems (one set of accounts for the tax man, one real set of accounts for the directors) and overseas collection accounts, there is some hope for dishonest foreign expats yet. Just look at Jack Daniels of Bali Discovery Tours! We have documented proof he wholesale avoided and likely still avoids Indonesian income tax, and his dubious travel agent company cheats on sales taxes (BS passim). But then Jack has “friends” in the police force and elsewhere that might cost him a few thousand bucks a year and multiple betrayals (be careful about what you tell or get involved with Jack) to maintain, so you had better be prepared yourself to sink to his level (stab others in the back) if you want the same privaledges in Bali.
Or, an even better idea is see the writing on the wall and avoid Bali like the plague. If you want some tropical paradise where you can stay all year and pay nothing on your overseas income, go to your nearest Malaysian embassy and ask them about their five and ten year multi-entry “Second home visas”. Tell Indonesia and its greedy, corrupt, dishonest, nasty government to stick their over-rated islands where the sun does not shine.