Indonesia’s government recently announced plans to develop a new “digital nomad” visa program that would allow remote workers to live and work in Indonesia tax-free for up to five years, Fortune reported on Tuesday.
Indonesian Tourism Minister Sandiaga Uno described the nascent initiative to Bloomberg on June 6. He said his ministry is designing the program to revamp Indonesia’s tourism sector from one which previously attracted a high volume of short-staying tourists to another which relies on higher-income visitors committed to staying for longer durations.
“In the past, the three S was: sun, sea and sand. We’re moving it to serenity, spirituality and sustainability. This way we’re getting better quality and better impact to the local economy,” Uno told Bloomberg in a TV interview.
“The [digital nomad] visa would allow its holders to stay for as long as five years without paying taxes if they don’t earn their income within Indonesia,” according to Bloomberg.
“Streamlined visa processing and more frequent flights should help the nation lure employees of global companies like Airbnb Inc. and Twitter Inc. that are letting their people work from anywhere,” the news outlet paraphrased Uno as saying.
“Around 95% of surveyed ‘digital nomads’ have said Indonesia — particularly Bali — is their ‘top of mind’ destination for remote work and they are ready to travel,” the tourism minister noted on Monday.
Fortune on Tuesday noted that Indonesia’s tax laws compare favorably to those of other countries that also offer similar “digital nomad” visa programs.
The business magazine observed:
Indonesia’s top tax bracket is a 35% tax rate at income above about $350,000. While that’s a lower tax rate than countries like the U.S. (which has a 35% tax bracket between $215,950 and $539,900) and the U.K. (which charges a 45% rate for income after a $187,000 threshold), it’s still more than other potential digital nomad hubs. Dubai, which offers its own one-year renewable “digital nomad” visa, does not charge income tax at all, whatever the visa type.
Indonesia is eager to rejuvenate its tourism sector after it suffered devastating losses over the past two years due to the Chinese coronavirus pandemic, along with most countries across Southeast Asia.
The number of tourists that visited Indonesia in April surged 500 percent on an annual basis to hit 111,000. This sum was the highest recorded since the pandemic began in March 2020, though it was still significantly lower than pre-pandemic statistics.
“The figure remained far below the number of visitors in January-April of 2018 and 2019, when around 4 million foreign visitors came to the Southeast Asian country each year,” Reuters reported.
Indonesia attracted an average of 1.3 million tourists each month in 2019.