Transcript
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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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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.
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
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.
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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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 Rates: Royalties and Branch Profits
The table should be used as a quick reference guide only - for detailed advice
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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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: Time Test
The table should be used as a quick reference guide only - for detailed advice
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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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.
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
immovable property located in Indonesia
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
immovable property located in Indonesia
Korea, South Exempt
Kuwait Exempt
Luxembourg Exempt
MalaysiaExempt: except where the assets of the Indonesian company are principally
immovable property located in Indonesia
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
immovable property located in Indonesia
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Country Time Test
PhilippinesExempt: except where the assets of the Indonesian company are principally
immovable property located in Indonesia
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.
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