tax

1. TAX NEWS FLASH
NOVEMBER 2011
Tax News Flash / November 2011
KPMG Hadibroto
In Indonesia, non-residents are normally subject to a 20%
withholding tax on the remittance of interest, dividends,
royalties and other payments outside the country. Double
tax treaties offer a lower withholding tax rate, usually 10% to
15%. In addition, most treaties provide for an exemption from
withholding tax, where interest is paid to the government
or other specified authorities in other countries.The treaties
also provide a “time test” for determining when a permanent
estabilishment is deemed to exist.
As of the end of August 2011, Indonesia has negotiated and
implemented tax treaties with 59 countries.
In addition, the treaties with Myanmar, Papua/New Guinea,
Morocco, Armenia,Tajikistan and the amended treaty with
Philippines have been signed, but are not yet in force.
IndonesianTaxTreaties Update
Quick Reference Guide
The amendedTreaty with Malaysia, which reduces the
withholding tax rates on dividends, royalties and interest to
10%, can be implemented, as both governments ratified it as
of May 2010. Further, this treaty seeks to exclude companies
incorporated in Labuan from obtaining treaty benefits.
Recently, the Indonesian Government has signed Agreements
for Exchange of Information with Guernsey, Isle of Man,
Jersey and Bermuda.Those agreements were signed this
year, but they are not yet in force.
Attached is sumary of the most relevant treaty provisions:
• Withholding tax rates for dividends, interest, royalties and
branch profits tax;
• Time test for construction projects and services; and
• Tax treatment on disposal of shares by a non-resident
Note that a Certificate ofTax Domicile (Form DGT-1 of DGT-2),
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.
In our continuing effort to assist our clients, we have prepared an updated summary of pertinent tax
treaty provisions.We hope that this will help those who are involved in cross-border transactions,
planning new business ventures in Indonesia or considering changes to their current business
structure.
Contact us
Abraham Pierre
Head ofTax
T: + 62 (0)21 570 4888
E: Abraham.Pierre@kpmg.co.id
kpmg.com/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 on such
information without appropriate professional advice after a thorough examination of the particular
situation.
© 2011 PT KPMG Hadibroto, an Indonesian limited liability company and a member firm of the
KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. Printed in Indonesia.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks
of KPMG International.

2. No Country
Withholding Rates
TimeTest
Disposal of shares by a non-resident
(with no permanent establishment)
Dividends Interest Royalties
Branch
Profit
Tax
Normal Lower Lower if1
Normal Lower Lower if2
Normal Lower Lower if
rates N/A
to some
PSC’s
construction4
services other
1 Algeria 15 - - 15 0 Government 15 - - 10 3 months 3 months - Exempt
2 Australia 15 - - 10 0 Government 15 10 equipment /
information3 15 120 days 120 days 120 days5 Not exempt: capital gains tax article does not limit the right of
Indonesia to levy tax on shares
3 Austria 15 10 25% 10 0 Government 10 - - 12 6 months 3 months - Exempt
4 Bangladesh 15 10 10% 10 0 Government 10 - - 10 183 days 91 days - Exempt
5 Belgium 15 10 25% 10 0 Government 10 - - 10 6 months 3 months - Exempt
6 Brunei 15 0 Government 15 0 Government 15 0 Government 10 183 days 3 months 3
months6 Exempt: except shares traded on the Stock Exchange
7 Bulgaria 15 - - 10 0 Government 10 - - 15 6 months 120 days - Exempt
8 Canada 15 10 25% 10 0 Government 10 -
excludes
technical
services
15 120 days 120 days -
Exempt: except where the value of the shares of the Indonesian
company derives principally from immovable property located in
Indonesia
9 China 10 - - 10 0 Government 10 - - 10 6 months 6 months 6
months5
Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
10 Czech Rep. 15 10 20% 12.5 0 Government 12.5 - - 12.5 6 months 3 months - Exempt
11 Denmark 20 10 25% 10 0 Government 15 - - 15 6 months 3 months 3
months6 Exempt
12 Egypt 15 - - 15 0 Government 15 - - 15 6 months 3 months 4
months6
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
13 Finland 15 10 25% 10 0 Government 15 10 copyright 15 6 months 3 months -
Exempt: except where the shares carry rights for the shareholder
to enjoy immovable property belonging to the company located in
Indonesia
14 France 15 10 25% 15 10 / 0 Industry /
Government 10 -
excludes
use of
equipment
10 6 months 183 days 183 days7 Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
15 Germany 15 10 25% 10 0 Government 15 10 / 7.5
equipment,
info / tech.
services
10 6 months - - Exempt
16 Hungary 15 - - 15 0 Government 15 - - 20 if transferred /
0 if not 3 months 4 months - Exempt
17 India 15 10 25% 10 0 Government 15 - - 10 183 days 91 days - Exempt
18 Iran 7 - - 10 0 Government 12 - - 7 6 months 183 days - Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
19 Italy 15 10 25% 10 0 Government 15 10 equipment /
information 12 6 months 3 months - Exempt
20 Japan 15 10 25% voting
stock 10 0 Government 10 - - 10 6 months ----- 6
months7 Exempt
21 Jordan 10 - - 10 0 Government 10 - - Not specified8
6 months 1 month - Not exempt
22 Korea, North 10 - - 10 0 Government 10 - - 10 12 months 6 months - Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
23 Korea, South 15 10 25% 10 0 Government 15 - - 10 6 months 3 months - Exempt
24 Kuwait 10 0 Government 5 0 Government 20 - - 10 3 months 3 months - Exempt
25 Luxembourg 15 10 25% 10 0 Government 12.5 10 technical
services 10 5 months - - Exempt
26 Malaysia 10 - - 10 0 Government 10 - - 12.5 6 months 3 months - Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
27 Mexico 10 - - 10 0 Government 10 - - 10 6 months 91 days - Not exempt
28 Mongolia 10 - - 10 0 Government 10 - - 10 6 months 3 months - Exempt
29 Netherlands 10 - - 10 0 Gov’t / loan
> 2 years 10 -
excludes
technical
services
10 6 months 3 months 30 days9
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
KPMG HADIBROTO
IndonesianTaxTreaties
Quick Reference Guide
(as of Nov 2011)

3. No Country
Witholding Rates
TimeTest
Disposal of shares by a non-resident
(with no permanent establishment)
Dividends Interest Royalties
Branch
Profit
Tax
Normal Lower Lower if1
Normal Lower Lower if2
Normal Lower Lower if
rates N/A
to some
PSC’s
construction4
services other
30 New Zealand 15 - - 10 0 Government 15 - - Not Specified8
6 months 3 months 3
months10 Exempt
31 Norway 15 - - 10 0 Government 15 10 other than
copyright 15 6 months 3 months 30 days9 Exempt: except if the shares form part of an interest which is at
least 30% of the Indonesian company
32 Pakistan 15 10 25% 15 0 Government 15 15
technical
services
10 3 months - -
Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
33 Philippines 20 15 25% 15 10 / 0 Bonds / Gov’t 15 - - 20 6 months 183 days 3 months6 Exempt: except where the assets of the Indonesian company are
principally immovable property located in Indonesia
34 Poland 15 10 20% 10 0 Government 15 - - 10 183 days 120 days - Exempt
35 Portugal 10 - - 10 0 Government 10 - - 10 6 months 183 days - Exempt
36 Qatar 10 - - 10 0 Government 5 - - 10 6 months 6 months - Exempt
37 Romania 15 12.5 25% 12.5 0 Government 15 12.5
other than
copyright
12.5 6 months 4 months - Exempt
38 Russia 15 - - 15 0 Government 15 - - 12.5 3 months - 3 months6
Exempt
39 Seychelles 10 - - 10 0 Government 10 - - Not specified8
6 months 3 months - Exempt
40 Singapore 15 10 25% 10 0 Government 15 - - 15 183 days 90 days 6 months7
Not specified, therefore taxable under Indonesian tax legislation
41 Slovak 10 - - 10 0 Government 15 10 copyright 10 6 months 91 days - Exempt
42 South Africa 15 10 10% 10 0 Government 10 - - 10 6 months 120 days - Exempt
43 Spain 15 10 25% 10 0 Government 10 - - 10 183 days 3 months - Exempt
44 Sri Lanka 15 - - 15 0 Government 15 - - 20 90 days 90 days - Exempt
45 Sudan 10 - - 15 0 Government 10 - - 10 6 months 3 months - Exempt
46 Sweden 15 10 25% 10 0 Government 15 10
equipment /
information
15 6 months 3 months -
Exempt: except where the shareholder was an individual resident in
Indonesia at any time in the 10 years prior to the disposal
47 Switzerland 15 10 25% 10 - - 10 5 services 1011
183 days - - Exempt
48 Syria 10 - - 10 - - 20 15 copyright 10 6 months 183 days - Exempt
49 Taiwan 10 - - 10 0 Government 10 - - 5 6 months 120 days - Exempt
50 Thailand 20 15 industry 15 0 Government 15 - - 20 6 months 6 months - Not exempt
51 Tunisia 12 - - 12 0 Government 15 - - 12 3 months 3 months - Exempt
52 Turkey 15 10 25% 10 0 Government 10 - - 1512
6 months 183 days - Exempt: except if less than 1 year between acquisition and alienation
53 UAE 10 - - 5 0 Government 5 - - 5 6 months 6 months - Exempt
54
United
Kingdom
15 10
15% voting
stock
10 0 Government 15 10 equipment 10 183 days 91 days -
Exempt: except where the shareholder was an individual resident in
Indonesia at any time in the 5 years prior to the disposal
55 Ukraine 15 10 20% 10 0 Government 10 - - 10 6 months 4 months
6
months13
Exempt: except where the assets of the Indonesian company are
principally real property located in Indonesia
56 United States 15 10
25% voting
stock
10 0 Government 10 - - 10 120 days 120 days 120 days5
Exempt
57 Uzbekistan 10 - - 10 - - 10 - - 10 6 months 3 months - Exempt
58 Venezuela 15 10 10% 10 0 Government 20 10
technical
assistance
10 6 months - -
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
59 Vietnam 15 - - 15 0 Government 15 - - 10 6 months 3 months - Not exempt
As of Nov 2011
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 on
such information without appropriate professional advice after a thorough examination of the particular situation.
© 2011 PT KPMG Hadibroto, an Indonesian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity. All rights reserved. Printed in Indonesia.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
1
% for lower rate refers to level of shareholding unless otherwise specified
2
Normally exempt if paid to the government or a subdivision thereof
3
industrial, scientific, commercial equipment / information unless otherwise specified
4
building site, construction, assembly or installation project, or supervisory
activities connected thereto (in most cases) -- see treaty for details
5
installation or drilling rig or ship used for exploration / exploitation of natural resources
6
assembly or installation project
7
supervisory services relating to construction, assembly or installation project;
Japan does not include assembly
8
domestic rate of 20% should apply
9
offshore oil activities
10
exploration / exploitation of natural resources
11
except for PSC and CoW relating to oil and gas or mining sector
12
confirmed by ITO circular (SE-2/PJ.03/2008)
13
exploration of natural resources
Contact us:
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