“Tax free” is deceptive, if it’s only referred to foreign sourced income. Income from any work is considered sourced where the work is performed, so this would only apply to foreign passive income (e.g. dividends or capital gains). And I’m not familiar with CFC-like rules in Indonesia but I guess they also apply some kind of economic substance requirement for a tax resident to own a company incorporated somewhere else and whose only purpose isn’t tax optimization.
And it only refers to taxes paid to Indonesia. US citizens still have to pay federal tax to the US (every country is different, but the US is unusually harsh in this regard).
US citizens can take comfort that they are in the company of Eritrea, the only other country that has citizenship-based taxation. And theirs is only 2%, but they enforce it by jailing your relatives if you don’t pay.
Maybe I read the article incorrectly, but it specifically states that income derived from foreign businesses is tax-free. So this should include any freelance work or employment with a foreign entity as well as business profits derived abroad. I don't think the "butt in seat" rule applies here.
It is a good idea to bring this up in any case, because there could be other tax implications, especially for Americans unaware that they will be paying tax on income above $108,700.
It doesn't matter where the employer/client is located. Income is taxed _where the work is performed_. If you work in Indonesia that's where your income will be taxed.
"Business profits" are different, since they are generally regarded as dividends distributed to shareholders who (in theory) don't "do work" for the company.
