The Director General of Taxes has issued regulation No. PER-23/PJ/2025 concerning the Determination of Domestic Tax Subjects and Foreign Tax Subjects, to clarify the determination of Domestic Tax Subject (DTS) and Foreign Tax Subject (FTS) status. This regulation aligns domestic provisions with the Income Tax Law (as amended by the Job Creation Law) and replaces the outdated PER-02/PJ/2009 and PER-43/PJ/2011.

The key provisions of PER-23/PJ/2025 are as follows:

1. Clarification of Domestic Tax Subject Criteria for Individuals: An individual (both Indonesian citizens and foreign nationals) is classified as a Domestic Tax Subject if the individual:

• Resides in Indonesia;
• Is present in Indonesia for more than 183 days within a 12-month period; or
• Is present in Indonesia in a tax year and has the intention to reside in Indonesia.

This regulation provides further clarification on the indicators of “residence” and “intention to reside” by adopting a substance-over-form approach, including the individual’s center of main life activities, habitual abode, and supporting immigration and contractual documentation.

2. Determination of Domestic Tax Subject Status for Entities

An entity is regarded as a Domestic Tax Subject if it is established or domiciled in Indonesia, including situations where its place of effective management and control is located in Indonesia. PER-23/PJ/2025 provides practical guidance on determining the place of management and control, based on strategic decision-making activities such as investment decisions, disposal of strategic assets, and the appointment of key management personnel.

3. Foreign Tax Subject Criteria, Particularly for Indonesian Citizens Residing Abroad

PER-23/PJ/2025 introduces a hierarchical test for determining Foreign Tax Subject status for Indonesian citizens who reside outside Indonesia for more than 183 days. The assessment is conducted based on:

• Permanent place of residence;
• Center of vital interests (personal, economic, and social);
• Habitual abode;
• Tax residence status in another country; and
• Fulfillment of Indonesian tax obligations and possession of a Certificate confirming eligibility as a Foreign Tax Subject.

4. Interaction with Double Taxation Avoidance Agreements (DTAs)

In the event of a conflict between domestic tax law and an applicable DTA, the determination of tax residence shall follow the provisions of the relevant DTA, including the applicable tie-breaker rules.

5. Commencement and Termination of Subjective Tax Obligations

The regulation reaffirms that the commencement and termination of subjective tax obligations follow the determination of tax subject status in accordance with PER-23/PJ/2025 and Article 2A of the Income Tax Law, thereby reducing the risk of disputes over the taxable period.

PER-23/PJ/2025 raises the standard of proof and documentation required in determining tax subject status, particularly for Indonesian citizens working or residing overseas and multinational business groups. Taxpayers are advised to reassess their tax residency status and ensure that adequate supporting documentation is maintained to mitigate the risk of tax adjustments and potential disputes in the future.

This regulation came into effect on 9 December 2025.