The Australia–Indonesia tax treaty, for a Bali property owner

Two countries, one villa. Which may tax the rent and the sale, how much Indonesia may withhold, and how Australia credits it.

Written from the Indonesian originals · Editor-reviewed · Law as read on 2026-10-16

By the balipropertyguide.com editorial team · Published 2026-10-16 · Last reviewed 2026-10-16 · 7 min read

4 primary sources cited on this page. How we check what is on this site

The Australia–Indonesia tax treaty, the articles a Bali owner meets

An Australian who owns, leases or lets property in Bali is taxed by two countries on the same income. The 1992 treaty decides which one may tax what, caps Indonesia’s withholding, and makes Australia credit the Indonesian tax.

Article	What it decides	Used on
Australia-Indonesia DTA art. 6(1)	Income from real property may be taxed in the State where the property is.	—
Australia-Indonesia DTA art. 6(2)(a)	Real property includes a lease of land and any other interest in or over land.	leasehold
Australia-Indonesia DTA art. 13(1)	Gains on selling real property may be taxed in the State where the real property is.	—
Australia-Indonesia DTA art. 10(2)	Indonesian tax on dividends to an Australian is capped at 15% of the gross dividend.	—
Australia-Indonesia DTA art. 11(2)	On interest: 10% of the gross interest.	—
Australia-Indonesia DTA art. 12(2)	On royalties: 10% for certain royalties and 15% in all other cases.	—
Australia-Indonesia DTA art. 24(1)	Indonesian tax paid is allowed as a credit against Australian tax on that income.	—
Australia-Indonesia DTA art. 4(3)	Resident in both? Decided by a permanent home, then habitual abode, then closer economic and personal relations.	—

Property income and gains: Indonesia may tax them

Income from real property may be taxed in the State where the property is (Australia-Indonesia DTA art. 6(1)). “Real property” includes a lease of land and any other interest in or over land (Australia-Indonesia DTA art. 6(2)(a)) — a Bali leasehold is inside the article, not outside it — and the article covers income from the direct use, letting or other use of real property (Australia-Indonesia DTA art. 6(4)). Gains on selling real property may be taxed in the State where the real property is (Australia-Indonesia DTA art. 13(1)), and so do gains on shares in a company whose assets are wholly or principally real property in the other State (Australia-Indonesia DTA art. 13(4)).

On the Indonesian side those taxes are the final ones: 10% of the gross rent on rent (PP 34/2017 art. 4(1)) and 2.5% on a land and building sale (PP 34/2016 art. 2(1)(a)). Article 4(2), the final-tax list.

Dividends, interest and royalties: capped

Payment from Indonesia to an Australian resident	Indonesian domestic rate	Treaty cap	Sources
Dividend from a PT PMA	20% of the gross amount	15% of the gross dividend	Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; Australia-Indonesia DTA art. 10(2)
Interest on a loan to a PT PMA	20% of the gross amount	10% of the gross interest	Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; Australia-Indonesia DTA art. 11(2)
Royalties	20% of the gross amount	10% for certain royalties and 15% in all other cases	Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; Australia-Indonesia DTA art. 12(2)
Branch profits after tax	20%, unless reinvested in Indonesia	15% of the profits after tax	Income Tax Law art. 26(4), as amended by Law 6/2023 art. 111; Australia-Indonesia DTA art. 10(6)

The treaty cap applies to income an Australian resident is beneficially entitled to; Indonesia’s law also looks to the beneficial owner’s residence (Income Tax Law art. 26(1a), as amended by Law 6/2023 art. 111). Article 26, Indonesia’s 20%.

What the treaty does not change

Income the treaty lets Indonesia tax is deemed to be income from sources in the State that may tax it (Australia-Indonesia DTA art. 23) — which is what lets the Australian credit work. The property article also applies to real property of an enterprise and real property used for independent personal services (Australia-Indonesia DTA art. 6(5)), so a villa held through a business is in it too. And the treaty does not affect either State's law on taxing capital gains from property not covered by the preceding paragraphs (Australia-Indonesia DTA art. 13(5)): for gains on things other than real property, land-rich shares and business property, each country’s own law decides. A treaty limits tax; it does not create one. Our summary of the structure.

Residence and the credit

Each country decides residence under its own law (Australia-Indonesia DTA art. 4(1)): Indonesia’s test is an individual, Indonesian or foreign, who lives in Indonesia, is in Indonesia more than 183 days in 12 months, or is in Indonesia in a tax year intending to live there (Income Tax Law art. 2(3)(a), as amended by Law 6/2023 art. 111). Someone resident in both is placed by a permanent home, then habitual abode, then closer economic and personal relations (Australia-Indonesia DTA art. 4(3)) — the point for an Australian spending long periods in a Bali villa. An Australian working independently in Indonesia may be taxed there after more than 120 days in any 12 months, or a fixed base there (Australia-Indonesia DTA art. 14(1)).

Indonesian tax paid under the treaty is allowed as a credit against Australian tax on that income (Australia-Indonesia DTA art. 24(1)). Where the two countries tax contrary to the treaty, a case goes to the competent authority within 3 years of the first notification of the action (Australia-Indonesia DTA art. 25(1)).

Status in Australian law, and when it took effect

The treaty was signed on 22 April 1992, at Jakarta (Australia-Indonesia DTA, signature block); its provisions have the force of law according to their tenor, so far as they affect Australian tax (Income Tax (International Agreements) Amendment Act 1992 (Cth), s. 11ZB as inserted). It applies from 1 July in the calendar year after entry into force, for withholding and for other tax (Australia-Indonesia DTA art. 29). This page reads the agreement as signed in 1992. The Multilateral Instrument has since modified it; the modified (synthesised) text is not on this page, and any article here may be affected. Can Australians buy property in Bali?

This is commentary on the treaty text, not tax advice. Australian tax on foreign income depends on Australian law, which this page does not cover.

Questions on this page

Is there a tax treaty between Australia and Indonesia?

Yes: the Agreement for the avoidance of double taxation signed at Jakarta on 22 April 1992, given the force of law in Australia by the Income Tax (International Agreements) Amendment Act 1992. It has since been modified by the Multilateral Instrument, which we have not read.

Where is rent from my Bali villa taxed?

Income from real property may be taxed where the property is (art. 6(1)); real property includes a lease of land and any interest in land (art. 6(2)(a)), and letting is covered (art. 6(4)). Indonesia may tax it; Australia allows the Indonesian tax paid as a credit against Australian tax on that income (art. 24(1)).

What withholding applies to dividends from my PT PMA?

Indonesia's domestic rate on dividends to a non-resident is 20% (Income Tax Law art. 26(1)). For a dividend beneficially owned by an Australian resident, the treaty caps Indonesian tax at 15% of the gross (art. 10(2)). Interest is capped at 10% (art. 11(2)).

Does selling shares in a company that owns Bali land escape Indonesian tax?

Not under the treaty: gains on shares in a company whose assets are wholly or principally real property in Indonesia may be taxed in Indonesia (art. 13(4)).

Sources cited on this page

Every rule above was read in the Indonesian original on 20 September 2026, not from an English summary. How we check this.