balipropertyguideThe UK–Indonesia tax treaty, for a Bali property owner
Which country may tax the rent, the sale and the dividends — and why selling the company is treated differently from the Australian treaty.
The UK–Indonesia tax treaty, the articles a Bali owner meets
A UK resident who owns or lets property in Bali, or holds it through a company, is taxed by both countries. The 1993 treaty decides which may tax what, caps Indonesian withholding, and has the UK credit the Indonesian tax. On one point it differs sharply from Australia’s treaty: selling the company.
| Article | What it decides | Used on |
|---|---|---|
| UK-Indonesia DTA art. 6(1) | Income from immovable property may be taxed in the State where the property is. | — |
| UK-Indonesia DTA art. 6(2) | Immovable property has the meaning it has under the law of the State where the property is, including rights to which general landed-property law applies and usufruct. | — |
| UK-Indonesia DTA art. 13(1) | Gains on immovable property may be taxed in the State where the immovable property is. | — |
| UK-Indonesia DTA art. 13(4) | Other gains, including shares, are taxable only in the State where the seller is resident. | — |
| UK-Indonesia DTA art. 10(2) | Indonesian tax on dividends is capped at 10% where the beneficial owner is a company controlling at least 15% of the voting power, and 15% in all other cases. | — |
| UK-Indonesia DTA art. 11(2) | On interest: 10% of the gross interest. | — |
| UK-Indonesia DTA art. 21(1)(a) | Indonesian tax is allowed as a credit against UK tax computed on the same profits, income or gains. | — |
| UK-Indonesia DTA art. 4(2) | Resident in both? Decided by permanent home, then center of vital interests, then habitual abode, then mutual agreement. | — |
Property income and gains
Income from immovable property may be taxed in the State where the property is (UK-Indonesia DTA art. 6(1)); the term has the meaning it has under the law of the State where the property is, including rights to which general landed-property law applies and usufruct (UK-Indonesia DTA art. 6(2)) — so whether a Bali lease counts is a question of Indonesian law, where the UUPA lists the lease among land rights (UUPA (Law 5/1960) art. 16(1)). The article covers income from direct use, letting or any other use of immovable property (UK-Indonesia DTA art. 6(3)), and also applies to immovable property of an enterprise and property used for independent personal services (UK-Indonesia DTA art. 6(4)) — a villa held by a business is inside it too. Gains on selling immovable property may be taxed in the State where the immovable property is (UK-Indonesia DTA art. 13(1)).
Selling the company instead
Gains on other property are taxable only in the State where the seller is resident (UK-Indonesia DTA art. 13(4)), except for an individual who was resident in the first State at any time in the 5 years before the sale (UK-Indonesia DTA art. 13(5)). The 1993 text has no clause letting Indonesia tax shares in a land-rich company. The Australian treaty does: shares in a company whose assets are wholly or principally real property in the other State (Australia-Indonesia DTA art. 13(4)). Our reading of the two texts side by side; the MLI may have changed the UK position, and Indonesia’s own rules on indirect transfers are not covered here. The Australian treaty.
Dividends, interest, royalties
| Payment from Indonesia to a UK resident | Indonesian domestic rate | Treaty cap | Sources |
|---|---|---|---|
| Dividend | 20% of the gross amount | 10% where the beneficial owner is a company controlling at least 15% of the voting power, and 15% in all other cases | Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; UK-Indonesia DTA art. 10(2) |
| Interest | 20% of the gross amount | 10% of the gross interest | Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; UK-Indonesia DTA art. 11(2) |
| Royalties | 20% of the gross amount | 15% for copyright, patents, know-how and similar, and 10% for the other class | Income Tax Law art. 26(1), as amended by Law 6/2023 art. 111; UK-Indonesia DTA art. 12(2) |
| Branch profits after tax | 20%, unless reinvested in Indonesia | 10% of the permanent establishment's profits after income tax | Income Tax Law art. 26(4), as amended by Law 6/2023 art. 111; UK-Indonesia DTA art. 10(7) |
Compared with Australia: the UK dividend cap drops to 10% for a corporate shareholder with 15% of the votes (UK-Indonesia DTA art. 10(2)), and the branch cap is 10% rather than 15% (Australia-Indonesia DTA art. 10(6)). Article 26.
One structural rule protects the holding chain: a State may not tax dividends paid by a company of the other State merely because its profits arose there, except where paid to its own residents or connected with a permanent establishment there (UK-Indonesia DTA art. 10(6)). Indonesia cannot tax a UK company’s onward dividends to its own UK shareholders just because the profits came from a Bali villa company.
Residence, credit, equal treatment
A resident is a person liable to tax there by reason of domicile, residence, place of management or similar (UK-Indonesia DTA art. 4(1)); a dual resident is placed by permanent home, then center of vital interests, then habitual abode, then mutual agreement (UK-Indonesia DTA art. 4(2)). Indonesian tax is allowed as a credit against UK tax computed on the same profits, income or gains (UK-Indonesia DTA art. 21(1)(a)). UK nationals in Indonesia face taxation no more burdensome than on Indonesian nationals in the same circumstances (UK-Indonesia DTA art. 23(1)), and a company owned from the UK, taxation no more burdensome than on similar Indonesian enterprises (UK-Indonesia DTA art. 23(3)).
Working from Bali
A UK resident doing independent professional work in Indonesia — consulting, design, teaching — may be taxed there after 91 days or more in any continuous 12 months, or a fixed base there (UK-Indonesia DTA art. 14(1)). The Australian treaty’s threshold is more than 120 days (Australia-Indonesia DTA art. 14(1)). A long stay in a Bali villa while working remotely can therefore matter sooner under the UK treaty — our comparison of the two thresholds, not a view on any individual’s residence.
Status
Signed 5 April 1993, at Jakarta (UK-Indonesia DTA, signature block), given effect by the Double Taxation Relief (Taxes on Income) (Indonesia) Order 1994, SI 1994/769 (SI 1994/769); it replaced the 1974 UK-Indonesia agreement (UK-Indonesia DTA art. 27). The Multilateral Instrument may have modified it; the modified text is not on this page.
This is commentary on the treaty text, not tax advice. UK tax on foreign income depends on UK law, which this page does not cover.
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Questions on this page
Is there a UK-Indonesia tax treaty?
Yes: signed at Jakarta on 5 April 1993 and given effect in the UK by the Double Taxation Relief (Taxes on Income) (Indonesia) Order 1994, SI 1994/769. It replaced the 1974 agreement (art. 27). The Multilateral Instrument may have modified it; we have not read the modified text.
Where is rent from a Bali villa owned by a UK resident taxed?
Income from immovable property may be taxed where the property is (art. 6(1)), including income from letting (art. 6(3)). The UK gives credit for the Indonesian tax against UK tax on the same income (art. 21(1)(a)).
If I sell shares in a PT PMA that owns Bali land, can Indonesia tax the gain?
Under the 1993 text, gains on property other than immovable property are taxable only where the seller is resident (art. 13(4)), and there is no land-rich-company clause like the Australian treaty's art. 13(4). Check the MLI-modified text and Indonesian domestic rules before relying on this.
What does Indonesia withhold on a dividend to a UK shareholder?
At most 10% where the beneficial owner is a company controlling at least 15% of the voting power, and 15% in other cases (art. 10(2)), against a 20% domestic rate.
Sources cited on this page
- SI 1994/769, Schedule — legislation.gov.uk
- Australia-Indonesia DTA
- Income Tax Law (Law 6/2023 art. 111)
Every rule above was read in the Indonesian original on 20 September 2026, not from an English summary. How we check this.