Introduction

There have been technological achievements, especialy in the fields of information and transportation, and improvements are continualy developing. Asa result, communication and interaction are made easier, expediting business agreements and decisions. Increased enthusiasm for globalization as wel as escalating interdependence between persons and nations provide a strong basis for growth and development of international transaction involving trade, service and investment.

Consequently, each nation and country are susceptible to influencing and being influenced by interaction and communication. From the economic perspective, al forms of protection for the benefit of a country are eliminated until goods, services, and capital flow in and out a country without obstacles (borderless economy).

Eficient global production processes with maximum output wil occur because global production resources are alocated eficiently to locations or countries which have comparative advantage. Global wealth can be atained as goods and services are purchased at relatively low prices.

Indonesian manpower wil continue to be highly mobile across national boundaries, especialy in regions where there is cross border employment. For example, many Singaporeans in Batam but live in Singapore. Further, there are many Indonesians who work overseas due to posting or to provide domestic services.

Increased international transactions in the service sector provide many benefits to Indonesia including growth in tax revenue.

Foreigners in Indonesia can be categorized as residents or non-residents depending on the length of time they stay in Indonesia and their activities. As soon as an individual becomes a resident in Indonesia for tax purposes, he/she is obligated to register at the appropriate tax ofice. In practice, many expatriates are reluctant to register, giving the reason that they have one employer and that the tax on their employment income has been withheld in accordance with paragraph 6 of article 21 of 1983 Income Tax Law, once an individual becomes a resident taxpayer, he/she is subject to tax on worldwide income, that is, income from sources within and outside Indonesia.

The issuance of amended income tax provisions in the year 2000, that is, Law Number 17 year 2000, is meant to make it clear that any individual who has become a resident should register at the appropriate local tax ofice.

After a taxpayer is registered and has a Tax ID Number (NPWP), he/she has obligations and rights as regulated by the prevailing tax provisions, for example, the obligation to pay and report monthly returns (SPT Masa) whereapplicable and annual returns (SPT Tahunan).