Indonesian Tax Treaties QRG

8/2/2019 Indonesian Tax Treaties QRG

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Contents

Tax Treaty Summary1.

Tax treaty rates: Dividends2.

and Interest

Tax treaty rates: Royalties3.

and Branch Profits

Tax treaty rates: Time Test4.

Disposal of shares by a non-5.

resident

KPMG Hadibroto

Indonesian Tax TreatiesQuick Reference Guide

December 2008

TAX

March 2009

2009 KPMG Hadibroto, an Indonesian limited liability company and a member firm of the KPMG network of independent

member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Tax Treaty Summary

In order to assist our clients, we have prepared an

updated summary of the most pertinent tax treaty

provisions. We hope that this will help those who

are involved in cross border transactions, whether

planning a new business venture in Indonesia or

considering a change to their current businessstructure.

In Indonesia, non-residents are normally subject to a 20% withholding tax

on the remittance of interest, dividends, royalties and other fees outside the

country. Double tax treaties offer a lower withholding tax rate, usually 10%

or 15%. In addition, most treaties provide for an exemption from withholding

tax where interest is paid to the government or other specified authority of the

other country. The treaties also provide for a time test for determining when a

permanent establishment is deemed to exist.

As at the end of 2008, Indonesia has negotiated and implemented tax treaties

with 57 countries.

In addition the treaties with Myanmar, Papua New Guinea, Morocco, Armenia.

Tajikistan, Qatar and the amended treaty with Philippines have been signed but

are not yet in force.

The amended Treaty with Malaysia which reduces the withholding tax rates

on dividends, royalties and interest to 10 % has not been implemented, as

ratification from both governments is still awaited. Further, this treaty seeks to

exclude companies incorporated in Labuan from obtaining treaty benefits.


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Attached is a summary of the most relevant treaty provisions:

witholding tax rates for dividends, interest, royalties and branch profits tax;

time tests for construction projects and services; and

tax treatment on the disposal of shares by a non-resident.

Note that a certificate of tax domicile from the competent tax authority of the

country of residence must be provided in order to obtain treaty relief.

Each treaty differs in scope and wording and this summary is intended for general

reference purposes only.

Specific advice should be sought before proceeding with any business

transaction for which a tax treaty might be applicable. Should you require further

information, we will be happy to assist you.


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Tax Treaty Rates: Dividends and Interest

The table should be used as a quick reference guide only - for detailed advice

refer to the specific wording in the treaty.

CountryDividends Interest

Normal Lower Condition for lower1 Normal Lower Conditions2

Algeria 15 - - 15 0 Government

Australia 15 - - 10 0 Government

Austria 15 10 25% 10 0 Government

Bangladesh 15 10 10% 10 0 Government

Belgium 15 10 25% 10 0 Government

Brunei 15 0 Government 15 0 Government

Bulgaria 15 - - 10 0 Government

Canada 15 10 25% 10 0 Government

China 10 - - 10 0 Government

Czech Rep. 15 10 20% 12.5 0 Government

Denmark 20 10 25% 10 0 Government

Egypt 15 - - 15 0 Government

Finland 15 10 25% 10 0 Government

France 15 10 25% 15 10 / 0 Industry / Government

Germany 15 10 25% 10 0 Government

Hungary 15 - - 15 0 Government

India 15 10 25% 10 0 Government

Italy 15 10 25% 10 0 Government

Japan 15 10 25% voting stock 10 0 Government

Jordan 10 - - 10 0 Government

Korea, North 10 - - 10 0 Government

Korea, South 15 10 25% 10 0 Government

Kuwait 10 0 Government 5 0 Government

Luxembourg 15 10 25% 10 0 Government

Malaysia 15 - - 15 0 Government

Mexico 10 - - 10 0 GovernmentMongolia 10 - - 10 0 Government

Netherlands 10 - - 10 0 Govt / loan > 2 years

New Zealand 15 - - 10 0 Government

Norway 15 - - 10 0 Government

Pakistan 15 10 25% 15 0 Government

Philippines 20 15 25% 15 10 / 0 Bonds / Govt

Poland 15 10 20% 10 0 Government

Portugal 10 - - 10 0 Government

Romania 15 12.5 25% 12.5 0 Government

Russia 15 - - 15 0 Government

Seychelles 10 - - 10 0 Government

Singapore 15 10 25% 10 0 Government

Slovak 10 - - 10 0 Government

South Africa 15 10 10% 10 0 GovernmentSpain 15 10 25% 10 0 Government

Sri Lanka 15 - - 15 0 Government

Sudan 10 - - 10 0 Government

Sweden 15 10 25% 10 0 Government

Switzerland 15 10 25% 10 - -

Syria 10 - - 10 - -

Taiwan 10 - - 10 0 Government

Thailand 15 - - 15 0 Government

Tunisia 12 - - 12 0 Government

Turkey 15 10 25% 10 0 Government

UAE 10 - - 5 0 Government

United Kingdom 15 10 15% voting stock 10 0 Government

Ukraine 15 10 20% 10 0 Government

United States 15 10 25% voting stock 10 0 Government

Uzbekistan 10 - - 10 - -

Venezuela 15 10 10% 10 0 Government

Vietnam 15 - - 15 0 Government



1

%for lower rate refers to level ofshareholding unless otherwise

specified2 normaly exempt if paid to the

government or a subdivision thereof


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Tax Treaty Rates: Royalties and Branch Profits


refer to the specific wording in the treaty.

Country Royalties Branch Profits TaxNormal Lower lower applies to: rates N/A to some PSCs

Algeria 15 - - 10

Australia 15 10 equipment / information3 15

Austria 10 - - 12

Bangladesh 10 - - 10

Belgium 10 - - 10

Brunei 15 0 Government 10

Bulgaria 10 - - 15

Canada 10 - excludes technical services 15

China 10 - - 10

Czech Rep. 12.5 - - 12.5

Denmark 15 - - 15

Egypt 15 - - 15

Finland 15 10 copyright 15

France 10 excludes use of equipment 10

Germany 15 10 / 7.5 equipment, info / tech.services 10

Hungary 15 - - 20 if transferred / 0 if not

India 15 - - 10

Italy 15 10 equipment / information 12

Japan 10 - - 10

Jordan 10 - - 20

Korea, North 10 - - 10

Korea, South 15 - - 10

Kuwait 20 - - 10

Luxembourg 12.5 10 technical services 10

Malaysia 15 - - 12.5

Mexico 10 - - 10

Mongolia 10 - - 10

Netherlands 10 - excludes technical services 10

New Zealand 15 - - 20

Norway 15 10 other than copyright 15

Pakistan 15 - - 10

Philippines 15 - - 20

Poland 15 - - 10

Portugal 10 - - 10

Romania 15 12.5 other than copyright 12.5

Russia 15 - - 12.5

Seychelles 10 - - 20

Singapore 15 - - 15

Slovak 15 10 copyright 10

South Africa 10 - - 10

Spain 10 - - 10

Sri Lanka 15 - - 20

Sudan 10 - - 10

Sweden 15 10 equipment / information 15

Switzerland 12.5 5 services 10

Syria 20 15 copyright 10

Taiwan 10 - - 5

Thailand 15 10 copyright 20

Tunisia 15 - - 12

Turkey 10 - - 10

UAE 5 - - 5

United Kingdom 15 10 equipment 10

Ukraine 10 - - 10

United States 10 - - 10Uzbekistan 10 - - 10

Venezuela 20 10 technical assistance 10

Vietnam 15 - - 10

3 industrial, scientific, commercial

equipment / informationing unless

otherwise specified


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Tax Treaty: Time Test


refer to the specific wording in the treaty

Country Time Testconstruction4 services other

Algeria 3 months 3 months -

Australia 120 days 120 days 120 days5

Austria 6 months 3 months -

Bangladesh 183 days 91 days -

Belgium 6 months 183 days -

Brunei 183 days 3 months 3 months6

Bulgaria 6 months 120 days -

Canada 120 days 120 days -

China 6 months 6 months -

Czech Rep. 6 months 3 months -

Denmark 6 months 3 months 3 months6

Egypt 6 months 3 months 4 months6

Finland 6 months 3 months -France 6 months 183 days 183 days7

Germany 6 months 7.5% -

Hungary 3 months 4 months -

India 183 days 91 days -

Italy 6 months 3 months -

Japan 6 months ----- 6 months7

Jordan 6 months 1 month -

Korea, North 12 months 6 months -

Korea, South 6 months 3 months -

Kuwait 3 months 3 months -

Luxembourg 5 months 10% -

Malaysia 6 months 3 months -

Mexico 6 months 91 days -

Mongolia 6 months 3 months -

Netherlands 6 months 3 months 30 days8

New Zealand 6 months 3 months 3 months9

Norway 6 months 3 months 30 days8

Pakistan 3 months 15% -

Philippines 6 months 183 days 3 months6

Poland 183 days 120 days -

Portugal 6 months 183 days -

Romania 6 months 4 months -

Russia 3 months ----- 3 months6

Seychelles 6 months 3 months -

Singapore 183 days 90 days 6 months7

Slovak 6 months 91 days -

South Africa 6 months 120 days -

Spain 183 days 3 months -

Sri Lanka 90 days 90 days -

Sudan 6 months 3 months -

Sweden 6 months 3 months -

Switzerland 183 days 5% -

Syria 6 months 183 days -

Taiwan 6 months 120 days -

Thailand 6 months 183 days -

Tunisia 3 months 3 months -

Turkey 6 months 183 days -

UAE 6 months 6 months -

United Kingdom 183 days 91 days -

Ukraine 6 months 4 months 6 months10

United States 120 days 120 days 120 days5

Uzbekistan 6 months 3 months -

Venezuela 6 months 10% -

Vietnam 6 months 3 months -

4 building site, construction, assembly

or installation project, or supervisory

activities connected thereto (in most

cases) -- see treaty for details5 installation or drilling rig or ship

used for exploration / exploitation of

natural resources6 assembly or installation project7 supervisory services relating

to construction, assembly or

installation project; Japan does not

include assembly8

offshore oil activities9 exploration / exploitation of natural

resources10exploration of natural resources


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Disposal of shares by a non-resident(with no permanent establishment)

The table should be used as a quick reference guide only - for detailed advice refer

to the specific wording in the treaty

Country Time Test

Algeria Exempt

AustraliaNot exempt: capital gains tax article does not limit the right of Indonesia to levy

tax on shares

Austria Exempt

Bangladesh Exempt

Belgium Exempt

Brunei Exempt: except shares traded on the Stock Exchange

Bulgaria Exempt

Canada

Exempt: except where the value of the shares of the Indonesian company

derives principally from immovable property located in Indonesia

ChinaExempt: except where the assets of the Indonesian company are principally

immovable property located in Indonesia

Czech Rep. Exempt

Denmark Exempt

Egypt

Exempt: except where the assets of the Indonesian company are principally

immovable property located in Indonesia OR where shares represent a

participation of 25% of the Indonesian company

FinlandExempt: except where the shares carry rights for the shareholder to enjoy

immovable property belonging to the company located in Indonesia

FranceExempt: except where the assets of the Indonesian company are principally


Germany Exempt

Hungary Exempt

India Exempt

Italy Exempt

Japan Exempt

Jordan Not exempt

Korea, NorthExempt: except where the assets of the Indonesian company are principally


Korea, South Exempt

Kuwait Exempt

Luxembourg Exempt

MalaysiaExempt: except where the assets of the Indonesian company are principally


Mexico Not exempt

Mongolia Exempt

Netherlands

Exempt: except where the shareholder owns at least 5% of issued capital and

was an individual resident in Indonesia in the course of 10 years prior to the

disposal

New Zealand Exempt

NorwayExempt: except if the shares form part of an interest which is at least 30% of the

Indonesian company

PakistanExempt: except where the assets of the Indonesian company are principally



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Country Time Test

PhilippinesExempt: except where the assets of the Indonesian company are principally


Poland Exempt

Portugal Exempt

Romania Exempt

Russia Exempt

Seychelles Exempt

Singapore Not specified

Slovak Exempt

South Africa Exempt

Spain Exempt

Sri Lanka Exempt

Sudan Exempt

Sweden Exempt: except where the shareholder was an individual resident in Indonesia atany time in the 10 years prior to the disposal

Switzerland Exempt

SyriaExempt: except where the shares carry rights for the shareholder to enjoy

immovable property belonging to a company or trust located in Indonesia

Taiwan Exempt

Thailand Exempt

Tunisia Exempt

Turkey Exempt: except if less than 1 year between acquis ition and alienation

UAE Exempt

United KingdomExempt: except where the shareholder was an individual resident in Indonesia at

any time in the 5 years prior to the disposal

UkraineExempt: except where the assets of the Indonesian company are principally real

property located in Indonesia

United States Exempt

Uzbekistan Exempt

Venezuela

Exempt: except where the assets of the Indonesian company are principally

immovable property located in Indonesia or rights pertaining thereto OR where

shares represent a participation of >10% of stock of the Indonesian company

Vietnam Not exempt

KPMG Hadibroto

33rd Floor Wisma GKBI

28, Jl. Jend. Sudirman

Jakarta 10210, Indonesia

Tel +62 (0) 21 570 4888

Fax +62 (0) 21 570 5888

kpmg.co.id

The information contained herein is of a general nature and is not intended to address the circumstances of any

particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no

guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the

future. No one should act upon such information without appropriate professional advice after a thorough examination of

the particular situations

2009 KPMG Hadibroto, an Indonesian limited liability

company and a member firm of the KPMG network

of independent member firms affiliated with KPMG

International, a Swiss cooperative. All rights reserved.

Documents

Indonesian Tax Treaties QRG