Oct 28, 2010

Indonesia - US Tax Treaty

CONVENTION BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE UNITED STATES OF AMERICA

(As Amended by 1996 Protocol)
FOR
THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

Article 1
PERSONAL SCOPE
This Convention is applicable to persons who are residents of one or both of the Contracting States.

Article 2
TAXES COVERED
1.
The existing taxes which are the subject of this Convention are:
(a)
In the case of Indonesia:
the income tax (pajak penghasilan 1984), and to the extent provided in such income tax, the company tax (pajak perseroan 1925), and the tax on interest dividends, and royalties (pajak atas bunga, dividen dan royalty 1970).
(b)
In the case of the United States:
the income taxes imposed by the Internal Revenue Code (but excluding the accumulated earnings tax, the personal holding company tax, and social security taxes).
2.
The Convention shall apply also to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes.

Article 3
GENERAL DEFINITIONS
1.
For purposes of this Convention only, unless the context otherwise requires:
(a)
the term "Indonesia" comprises the territory of the Republic of Indonesia and the adjacent seas which the Republic of Indonesia has sovereignty, sovereign rights or jurisdictions in accordance with the provisions of the 1982 United Nations Convention on the Law of the Sea.
(b)
The term "United States" means the United States of America. When used in a geographical sense, the term "United States" means the States thereof, the District of Columbia and those parts of the continental shelf and adjacent seas over which the United States has sovereignty, sovereign rights or other rights in accordance with international law.
(c)
the term "one of the Contracting States" of "the other Contracting State" means Indonesia or the United States, as the context requires.
(d)
the term "person" includes an individual, a partnership, a company, an estate, a trust, or any body of persons.
(e)
the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes.
(f)
the term "competent authority"' means:
(i)
in the case of Indonesia, the Minister of Finance or his authorized representative, and
(ii)
in the case of the United States, the Secretary of the Treasury or his authorized representative.
(g)
the term "Indonesian tax" means tax imposed by Indonesia to which this Convention applies by virtue of Article 2 (Taxes Covered) and the term "United States tax" means tax imposed by the United States to which this Convention applies by virtue of Article 2 (Taxes Covered).
(h)
the term "international traffic" means any transport by a ship or aircraft, except where such transport is solely between places in the other Contracting State.
2.
Any other term used in this Convention and not defined in this Convention shall, unless the context otherwise requires, have the meaning which it has under the laws of the Contracting State whose tax is being determined. Notwithstanding the preceding sentence, if the meaning of such a term under the laws of one of the Contracting States is different from the meaning of the term under the laws of the other Contracting State, or if the meaning of such a term is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or to further any other purpose of this Convention, establish a common meaning of the term for the purposes of the Convention.

Article 4
FISCAL RESIDENCE
1.
In this Convention, the term "resident of a Contracting State" means any person who under the laws of that State is liable to tax therein by reason of his domicile, residence, place of incorporation, place of management or any other criterion of a similar nature. For purposes of United States tax, in the case of a partnership, estate, or trust, the term applies only to the extent that the income derived by such person is subject to United States tax as the income of a resident, either in its hands or in the hands of its partners or beneficiaries.
2.
Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States:
(a)
he shall be deemed to be a resident of that Contracting State in which he maintains his permanent home. If he has a permanent home in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of that Contracting State with which his personal and economic relations are closest (center of vital interests);
(b)
if the Contracting State in which he has his center of vital interests cannot be determined, he shall be deemed to be a resident of that Contracting State in which he has a habitual abode;
(c)
if he has an habitual abode in both Contracting States or in neither of the Contracting States, he shall be deemed to be a resident of the Contracting State of which he is a citizen; and
(d)
if he is a citizen of both Contracting States or of neither Contracting State, the competent authorities of the Contracting States shall settle the question by mutual agreement.
For purposes of this paragraph, a permanent home is the place where an individual dwells with his family.
3.
An individual who is deemed to be a resident of one of the Contracting States and not a resident of the other Contracting State by reason of the provisions of paragraph 2 shall be deemed to be a resident only of the first-mentioned Contracting State for all purposes of this Convention, including Article 28 (General Rules of Taxation).
4.
Where by reason of the provisions of paragraph 1 a company is a resident of both Contracting States, when it shall be deemed to be a resident of the State in which it is organized or incorporated.

Article 5
PERMANENT ESTABLISHMENT
1.
For the purpose of this Convention, the term "permanent establishment" means a fixed place of business through which the business of a resident of one of the Contracting States is wholly or partly carried on.
2.
The term "permanent establishment" includes but is not limited to:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop;
(f) a farm or plantation;
(g) a warehouse
(h)
a mine, oil or gas well, a quarry, or other place of extraction of natural resources;
(i)
a building site or construction or assembly or installation project, or supervisory activities in connection therewith, or an installation or drilling rig or ship used for the exploration or exploitation of natural resources, which exists or continues for more than 120 days;
(j)
the furnishing of services, including consultancy services, through employees or other personnel engaged for such purposes, but only where activities of that nature continue (for the same or a connected project) for more than 120 days within any consecutive 12-month period, provided that a permanent establishment shall not exist in any taxable year in which such services are rendered in that State for a period or periods aggregating less than 30 days in that taxable year;
3.
Notwithstanding paragraphs 1 and 2, a permanent establishment shall not be deemed to exist by reason of one or more of the following:
(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the resident;
(b) the maintenance of a stock of goods or merchandise belonging to the resident solely for the purpose of processing by play;
(c) the maintenance of a stock of good or merchandise belonging to the reisdent solely for the purpose of processing by another person;
(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the resident; or
(e) the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research, or for similar activities which have a preparatory or auxiliary character, for the resident.
4.
A person acting in one of the Contracting States on behalf of a resident of the other Contracting State, other than an agent of an independent status to whom paragraph 5 applies, shall be deemed to be a permanent establishment in the first-mentioned Contracting State if such person :
(a)
has and habitually exercises in the first-mentioned Contracting State, an authority to conclude contracts on behalf of that resident, unless the activities of such person are limited to those mentioned in paragraph 3 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions, of that paragraph; or
(b)
has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise belonging to the resident from which he regularly fills orders or makes deliveries on behalf of that resident and additional activities conducted in that State on behalf of the resident have contributed to the sale of such goods or merchandise.
5.
A resident of one of the Contracting States shall not be deemed to have a permanent establishment in the other Contracting State merely because such resident carries on business in that other Contracting State through a broker, general commission agent, or any other agent of an independent status, where such broker or agent is acting in the ordinary course of his business.
6.
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.
7.
An insurance company which is a resident of one of the Contracting States, shall, except with regard to reinsurance, be considered as having a permanent establishment in the other Contracting State if, through a person other than one described in paragraph 5, such company receives premiums from or insures risks in the territory of that other Contracting State.

Article 6
INCOME FROM IMMOVABLE (REAL) PROPERTY
1.
Income from immovable property, including income in respect of the operation of mines, oil or gas wells, quarries, or other natural resources and gains derived from the sale, exchange, or other disposition of such property or of the right giving rise to such income, may be taxed by the Contracting State in which such immovable property, mines, oil or gas wells, quarries, or other natural resources are situated. For purposes of this Convention, interest on indebtedness secured by immovable property or secured by a right giving rise to income in respect of the operation of mines, quarries, or other natural resources shall not be regarded as income from immovable property.
2.
Paragraph 1 shall apply to income derived from the usufruct, direct use, letting, or use in any other form of immovable property.
3.
The provisions of paragraphs 1 and 2 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7
SOURCE OF INCOME
For purposes of this Convention :
1.
Dividends paid by a resident of a Contracting State shall be treated as income from sources within that State.
2.
Interest shall be treated as income from sources within a Contracting State only if paid by such Contracting State, a political subdivision or a local authority thereof, or by a resident of that Contracting State. Notwithstanding the preceding sentence, if the person paying the interest (whether or not such person is a resident of one of the Contracting States) has a permanent establishment in one of the Contracting States and such interest is borne by such permanent establishment, such interest shall be deemed to be from sources within the Contracting State in which the permanent establishment is situated.
3.
Royalties described in paragraph 3 of Article 13 (Royalties) for the use of, or the right to use, property or rights described in such paragraph within a Contracting State shall be treated as income from sources within such Contracting State.
4.
Income from immovable property including income in respect to the operation of mines, oil wells, quarries, or other natural resources (including gains derived from the sale of such property or the right giving rise to such income) shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State.
5.
Income from the rental of tangible personal (movable) property, other than ships or aircraft or containers used in international traffic, shall be treated as income from sources within a Contracting State only if such property is situated in that Contracting State.
6.
Income received by an individual for his performance of labor or personal services, whether as an employee or in an independent capacity, shall be treated as income from sources within a Contracting State only to the extent that such services are performed in that Contracting State. Income from personal services performed aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be treated as income from sources within that Contracting State if rendered by a member of the regular complement of the ship or aircraft. For purposes of this paragraph, income from labor or personal services includes pensions (as defined in paragraph 4 of Article 21 (Private Pensions and Annuities)) paid in respect of such services. Notwithstanding the preceding provisions of this paragraph, remuneration described in Article 22 (Social Security Payments) shall be treated as income from sources within a Contracting State only if paid by or from the public funds of that Contracting State or a political subdivision or local authority thereof.
7.
Income from the sale, exchange or other disposition of property described in paragraph 1(a) and (b) of Article 14 (Capital Gains) shall be treated as income from sources within Indonesia or the United States, as the case may be.
8.
Notwithstanding paragraphs 1 through 6, business profits which are attributable to a permanent establishment which the recipient, a resident of one of the Contracting States, has in the other Contracting State, including income derived from immovable property and natural resources and dividends, interest, royalties (as defined in paragraph 3 of Article 13 (Royalties)) and capital gains shall be treated as income from sources within that other Contracting State, but only if the property or rights giving rise to such income, dividends, interest, royalties, or capital gains are effectively connected with such permanent establishment.
9.
The source of any item of income to which paragraphs 1 through 8 are not applicable shall be determined by each of the Contracting States in accordance with its own law. Notwithstanding the preceding sentence, if the source of any item of income under the laws of one Contracting State is different from the source of such item of income under the laws of the other Contracting State or if the source of such income is not readily determinable under the laws of one of the Contracting States, the competent authorities of the Contracting States may, in order to prevent double taxation or further any other purpose of this Convention, establish a common source of the item of income for purposes of this Convention.

Article 8
BUSINESS PROFITS
1.
Business profits of a resident of one of the Contracting States shall be exempt from tax by the other Contracting State unless such resident carries on business in that other Contracting State through a permanent establishment situated therein. If such resident carries on business as aforesaid, tax may be imposed by that other Contracting State on the business profits of such resident but only on so much of such profits as are attributable to the permanent establishment or are derived from sources within such other Contracting State from sales of goods or merchandise of the same kind as those sold, or from other business transactions of the same kinds as those effected, through the permanent establishment.
2.
Where a resident of one of the Contracting States carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to the permanent establishment the business profits which would be attributable to such permanent establishment if such permanent establishment were an independent entity engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the resident of which it is a permanent establishment.
3.
In the determination of the business profits of a permanent establishment, there shall be allowed as deductions expenses which are reasonably connected with such profits, including executive and general administrative expenses, whether incurred in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights or by way of commission for specific services performed or for management or by way of interest on moneys lent to the head office of the enterprise or any of its other offices.
4.
No profits shall be attributed to a permanent establishment of a resident of one of the Contracting States in the other Contracting State merely by reason of the purchase of goods or merchandise by that permanent establishment, or by the resident of which it is a permanent establishment, for the account of that resident.
5.
Where business profits include items of income which are dealt with separately in other articles of this Convention, the provisions of those articles shall, except as otherwise provided therein, supersede the provisions of this Article.

Article 9
SHIPPING AND AIR TRANSPORT
1.
Notwithstanding Article 8 (Business Profits), a resident of a Contracting State shall be exempt from taxation by the other Contracting State with respect to income derived by that resident from the operation of ships or aircraft in international traffic.
2.
For the purposes of paragraph 1, income from the operation of ships or aircraft in international traffic includes:
(a)
income from the rental of ships or aircraft in international traffic on a full basis;
(b)
income from the rental of aircraft on a bareboat basis if the aircraft is operated in international traffic;
(c)
income from the rental of ships on a bareboat basis if the ship is operated in international traffic and the lessee is not a resident of the other Contracting State or a permanent establishment in that other State; and
(d)
income from the use or maintenance of containers (and related equipment for the transport of containers) used in international traffic if such income is incidental to the income described in paragraph 1.
3.
Notwithstanding Article 14 (Capital Gains), gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or containers (and related equipment for the transport of containers) used in international traffic shall be taxable only in that State.

Article 10
RELATED PERSONS
1.
Where a resident of one of the Contracting States and any other person are related and where such related persons make arrangements or impose conditions between themselves which are different from those which would be made between independent persons, any income, deductions, credits, or allowances which would, but for those arrangements or conditions, have been taken into account in computing the income (or loss) of, or the tax payable by, one of such persons, may be taken into account in computing the amount of the income subject to tax and the taxes payable by such person.
2.
A person is related to another person if either person participates directly or indirectly in the management, control or capital of the other, or if any third person or persons participates directly or indirectly in the management, control or capital of both. For this purpose, the term "control" includes any kind of control, whether or not legally enforceable, and however exercised or exercisable.
3.
Where a Contracting State includes in the profits of a resident of that State, and taxes accordingly, profits on which a resident of the other Contracting State has been charged to tax in that other State, and the profits so included are profits which would have accrued to the resident of the first-mentioned State if the conditions made between the two residents had been those which would have been made between independent persons, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be paid to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.

Article 11
DIVIDENDS
1.
Dividends derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States.
2. However, if the beneficial owner of the dividends is a resident of the other Contracting State, the tax charged by the first-mentioned State may not exceed:
(a) 10 percent of the gross amount of the dividends if the beneficial owner is a company that owns directly at least 25 percent of the voting stock of the company paying the dividends;
(b) 15 percent of the gross amount of the dividends in all other cases.
3.
Paragraph 2 shall not apply if the recipient of the dividends, being a resident of one of the Contracting States, has a permanent establishment or fixed base in the other Contracting State and the shares with respect to which the dividends are paid are effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.
4.
Where a company which is a resident of a Contracting State has a permanent establishment in the other Contracting State, that other State may impose an additional tax in accordance with its law on the profits attributable to the permanent establishment (after deducting therefrom the company tax and other taxes on income imposed thereon in that other State) and on interest payments allocable to the permanent establishment, but the additional tax so charged shall not exceed 10 percent.
5.
The rate of tax referred to in paragraph 4 of this Article shall not affect the rate of any such additional tax contained in any production sharing contracts and contracts of work (or any other similar contracts) relating to oil and gas or other mineral products negotiated by the Government of Indonesia, its instrumentality, its relevant State oil company or any other entity thereof with a person who is a resident of the United States.

Article 12
INTEREST
1.
Interest derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States.
2.
The rate of tax imposed by one of the Contracting States on interest derived from sources within that Contracting State and beneficially owned by a resident of the other Contracting State shall not exceed 10 percent of the gross amount of such interest.
3.
Notwithstanding paragraphs 1 and 2, interest arising in one of the two States shall be taxable only in the other State to the extent that such interest is derived by:
(i) the Government of the other State, including political subdivisions and local authorities thereof, or
(ii) the Central Bank of the other State; or
(iii) a financial institution owned or controlled by the Government of the other State, including political subdivisions and local authorities thereof.
4.
Paragraph 2 shall not apply if the recipient of the interest, being a resident of one of the Contracting States, has a permanent establishment or fixed base in the other Contracting State and the indebtedness giving rise to the interest is effectively connected with such permanent establishment or fixed base. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.
5.
Where any amount designated as interest paid to any related person exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the interest as would have been paid to an unrelated person. In such a case the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.
6.
The term "interest" as used in this Convention means income from bonds, debentures, Government securities, notes, or other evidences of indebtedness, whether or not secured by a mortgage or other securities and whether or not carrying a right to participate in profits, and debt-claims of every kind, as well as all other income which, under the taxation law of the Contracting State in which the income has its source, is assimilated to income from money lent.
Article 13
ROYALTIES
1.
Royalties derived from sources within one of the Contracting States by a resident of other Contracting State may be taxed by both Contracting States.
2.
The rate of tax imposed by a Contracting State on royalties derived from sources within that Contracting State and beneficially owned by a resident of the other Contracting State shall not exceed 10 percent of the gross amount of royalties described in paragraph 3.
3. (a)
The term "royalties" as used in this Article means payments of any kind made as consideration for the use of, or the right to use, copyrights of literary, artistic, or scientific works (including copyrights or motion pictures and films, tapes or other means of reproduction used for radio or television broadcasting), patents, designs, models, plans, secret processes or formula, trademarks, or for information concerning industrial, commercial or scientific experience. It also includes gains derived from the sale, exchange, or other dispositions of any such property or rights to the extent that the amounts realized on such sale, exchange or other disposition for consideration are contingent on the productivity, use, or disposition of such property or rights.
(b)
The term "royalties" as used in this Article also includes payments by a resident of one of the Contracting States for the use of, or the right to use, industrial, commercial or scientific equipment, but not including ships, aircraft or containers the income from which is exempt from tax by the other Contracting State under Article 9 (Shipping and Air Transport).
4.
Paragraph 2 shall not apply if the recipient of the royalty, being a resident of one of the Contracting States, has in the other Contracting State a permanent establishment or fixed base and the property or rights giving rise to the royalty is effectively connected with such permanent establishment. In such a case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply.
5.
Where any amount designated as a royalty paid to any related person exceeds an amount which would have been paid to an unrelated person, the provisions of this Article shall apply only to so much of the royalty as would have been paid to an unrelated person. In such a case the excess payment may be taxed by each Contracting State according to its own law, including the provisions of this Convention where applicable.

Article 14
CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from the alienation of property described in Article 6 (Income from Immovable (Real) Property) and situated in the other Contracting State may be taxed in that other State. The term "property described in Article 6 (Income from Immovable (Real) Property) situated within the other Contracting State" includes :
(a)
Where Indonesia is the other Contracting State, an interest in real property situated in Indonesia; and
(b)
Where the United States is the other Contracting State, a United States real property interest.
2.
A resident of one of the Contracting States shall be exempt from tax by the other Contracting State of gains derived from the sale, exchange, or other disposition of capital assets other than assets described in paragraph 1 unless :
(a)
The recipient of the gain has a permanent establishment or fixed base in the other Contracting State and the property giving rise to the gain is effectively connected with such permanent establishment or fixed base, in which case the provisions of Article 8 (Business Profits) or Article 15 (Independent Personal Services) shall apply; or
(b)
The recipient of the gain is an individual and is present in the other Contracting State for a period or periods aggregating 120 days or more during the taxable year.
3.
Notwithstanding paragraph 2, gains derived by a resident of a Contracting State from the deemed alienation of assets described in paragraph (2)(i) of Article 5 (Permanent Establishment) and used for the exploration for or exploitation of oil and gas resources shall be taxable only in that State.

Article 15
INDEPENDENT PERSONAL SERVICES
1.
Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent characters shall be taxable only in that State except in the following circumstances, when such income may also be taxed in the other Contracting State:
(a)
If he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case, only so much of the income as is attributable to that fixed base may be taxed in that other Contracting State; or
(b)
If his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 120 days in any consecutive 12-month period; in that case, only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.
2.
The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 16
DEPENDENT PERSONAL SERVICES
1.
Wages, salaries, and similar remuneration derived by an individual who is a resident of one of the Contracting States from labor or personal services performed as an employee, including income from services performed by an officer of a corporation or company, may be taxed by that Contracting State. Except as provided by paragraph 2, such remuneration derived from sources within the other Contracting State may also be taxed by that other Contracting State.
2.
Remuneration described in paragraph 1 derived by an individual who is a resident of one of the Contracting States shall be exempt from tax by the other Contracting State if :
(a)
he is present in that other Contracting State for a period or periods aggregating less than 120 days in any consecutive 12-month period; and
(b)
the remuneration is paid by or on behalf of an employer who is not a resident of the other State; and
(c)
the remuneration is not borne as such or reimbursed by a permanent establishment which the employer has in that other Contracting State.
3.
Notwithstanding paragraph 2, remuneration derived by an individual from the performance of labor or personal services as an employee aboard ships or aircraft operated by a resident of one of the Contracting States in international traffic shall be exempt from tax by the other Contracting State if such individual is a member of the regular complement of the ship or aircraft.

Article 17
ARTISTES AND ATHLETES
1.
Notwithstanding Articles 15 (Independent Personal Services) and 16 (Dependent Personal Services), income derived by public entertainers, such as theatre, motion picture, radio or television artistes, and musicians, and by athletes, from their personal activities as such may be taxed in the Contracting State in which those activities are exercised if the gross amount of such remuneration, including expenses reimbursed to him or borne on his behalf, exceeds in the aggregate 2,000 United States dollars or its equivalent in Indonesian rupiahs in any consecutive 12-month period.
2.
Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but is diverted to another person, that income may, notwithstanding the provisions of Articles 8 (Business Profits) and 15 (Independent Personal Services), be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3.
The provisions of paragraph 1 and 2 shall not apply to remuneration or profits derived from activities exercised in a Contracting State if the visit to that State is substantially supported or sponsored by the other Contracting State and is certified by the competent authority of the sending State to qualify under this provision.

Article 18
GOVERNMENT SERVICE
1. (a)
Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to any individual in respect to services rendered to that State or political subdivision or local authority thereof shall be taxable only in that State.
(b)
However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient is a resident of that State who: 
(i)
is a national of that State; or
(ii)
did not become a resident of that State solely for the purpose of performing the services.
2.
Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to any individual in respect of services rendered to that State or political subdivision or local authority thereof shall be taxable only in that State.
3.
The provisions of Articles 15 (Independent Personal Services), 16 (Dependent Personal Services), and 21 (Private Pensions and Annuities) shall apply to remuneration or pensions in respect of services rendered in connection with any trade or business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 19
STUDENTS AND TRAINEES
1. (a)
An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State solely: 

(i)
as a student at a recognized university, college, school or other similar recognized educational institution in that other State; or

(ii)
as a recipient of a grant, allowance or award for the primary purpose of study, research or training from the Government of either state or from a scientific, educational, religious or charitable organization or under a technical assistance program entered into by the Government of either State;

shall be exempt from tax in that other State for a period not exceeding five years from his date of arrival in that other State on amounts described in subparagraph (b).

(b)
The amounts referred to in subparagraph (a) are:

(i)
all remittances from abroad for the purposes of his maintenance, education, study, research, or training;

(ii)
the amount of such grant, allowance or award; and

(iii)
any remuneration not exceeding two thousand United States dollars or its equivalent in Indonesian rupiahs per year in respect of services in that other State, provided the services are performed in connection with his study, research or training or are necessary for the purposes of his maintenance.

2.
An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in the other State solely as a business or technical apprentice shall be exempt from tax in that other State for a period not exceeding twelve consecutive months on his income from personal services in an aggregate amount not in excess of 7,500 United States dollars or its equivalent in Indonesian rupiahs.


Article 20
TEACHERS AND RESEARCHERS
1.
An individual who is a resident of a Contracting State immediately before making a visit to the other Contracting State, and who, at the invitation of a university, college, school or other similar educational institution, visits that other State solely for the purpose of teaching or research or both at such educational institution shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from his date of arrival in that other State. An individual shall be entitled to the benefits of this paragraph only once.
2.
This Article shall not apply to income from research if such research is undertaken primarily for the private benefit of a specific person or persons.

Article 21
PRIVATE PENSIONS AND ANNUITIES
1.
Except as provided in Article 18 (Government Service), pensions and other similar remuneration in consideration of past employment derived from sources within one of the Contracting States by a resident of the other Contracting State may be taxed by both Contracting States. If the beneficial owner of pensions and other similar remuneration is a resident of the other Contracting State, the tax so charged may not exceed 15 percent of the gross amount thereof.
2.
Annuities paid to an individual who is a resident of one of the Contracting States shall be taxable only in that Contracting State.
3.
Alimony and child support payments made by an individual who is a resident of one of the Contracting States to an individual who is a resident of the other Contracting State shall be exempt from tax in that other Contracting State.
4.
The term "pensions and other similar remuneration", as used in this Article, means payments made by reason of retirement or death in consideration for services rendered, or by way of compensation for injuries received in connection with past employment.
5.
The term "annuities", as used in this Article, means a stated sum paid periodically at stated times during life, or during a specified number of years, under an obligation to make the payments in return for adequate and full consideration (other than services rendered).
6.
The term "alimony", as used in this Article, means periodic payments made pursuant to a decree of divorce, separate maintenance agreement, or support or separation agreement.

Article 22
SOCIAL SECURITY PAYMENTS
Social security payments and similar benefits paid out of public funds by one of the Contracting States to an individual who is a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned Contracting State. This Article shall not apply to payments described in Article 18 (Government Service).

Article 23
RELIEF FROM DOUBLE TAXATION
Double taxation of income shall be avoided in the following manner :
1.
In accordance with the provisions and subject to the limitations of the law of the United States, as in force from time to time, the United States shall allow to a citizen or resident of the United States as a credit against the United States tax the appropriate amount of Indonesian tax. Such appropriate amount shall be based upon the amount of tax paid to Indonesia, but the credit shall not exceed the limitations provided by United States law for the taxable year. For the purpose of applying the United States credit in relation to taxes paid to Indonesia, the rules set forth in Article 7 (Source of Income) shall be applied to determine the source of income, subject to such source rules in domestic law as apply solely for the purposes of limiting the foreign tax credit.
2.
In accordance with the provisions and subject to the limitations of the law of Indonesia, as in force from time to time, Indonesia shall allow to a resident of Indonesia as a credit against Indonesian tax the appropriate amount of income taxes paid to the United States. Such appropriate amount shall be based upon the amount of tax paid to the United States but shall not exceed the limitations provided by Indonesian law for the taxable year. For the purpose of applying the Indonesian credit in relation to taxes paid to the United States, the rules set forth in Article 7 (Source of Income) shall be applied to determine the source of income.

Article 24
NON-DISCRIMINATION
1.
A citizen of one of the Contracting States who is a resident of the other Contracting State shall not be subjected in that other Contracting State to more burdensome taxes or connected requirements than a citizen of that other Contracting State who is a resident therefore under the same conditions or circumstances.
2.
Except as provided in paragraph 4 of Article 11 (Dividends), a permanent establishment which a resident of one of the Contracting States has in the other Contracting State shall not be subject in that other Contracting State to more burdensome taxes or connected requirements than a resident of that other Contracting State carrying on the same activities. This paragraph shall not be construed as obliging a Contracting State to grant to individual residents of the other Contracting State any personal allowances, reliefs, or deductions for taxation purposes on account of civil status or family responsibilities which it grants to its own individual residents.
3.
A corporation of one of the Contracting States, the capital of which is wholly or partly owned or controlled by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which a corporation of the first-mentioned Contracting State carrying on the same activities, the capital of which is wholly owned or controlled by one or more residents of the first-mentioned Contracting State, is or may be subjected.
4.
Except where the provisions of paragraph 1 of Article 10 (Related Persons), paragraph 5 of Article 12 (Interest), or paragraph 5 of Article 13 (Royalties) apply, interest, royalties, and other disbursements paid by a resident of a Contracting State to a resident of the other Contracting State shall, for the purposes of determining the taxable profits of the first-mentioned resident, be deductible under the same conditions (including rules governing the allowable debt to equity ratio) as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of a resident of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of the first-mentioned resident, be deductible under the same conditions (including rules governing the allowable debt to equity ratio) as if they had been contracted to a resident of the first-mentioned State.
5.
For the purposes of this Article, the Convention shall apply, notwithstanding the provisions of Article 2 (Taxes Covered), to taxes of every kind imposed by a Contracting State.

Article 25
MUTUAL AGREEMENT PROCEDURE
1.
Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Convention, he may, notwithstanding the remedies provided by the national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24 (Non-discrimination), to that of the Contracting State of which he is a national. The case must be presented within three years of the first notification of that action. Where a combination of decisions or actions taken in both Contracting States results in taxation not in accordance with the provisions of the Convention, the three years begins to run only from the first notification of the most recent action or decision.
2.
The competent authority shall endeavor, if the objection appears to it to be justified and it is not itself able to arrive at an appropriate solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits or other procedural limitations in the domestic law of the Contracting States.
3.
The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties arising as to the application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.
4.
The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of this Article. When it seems advisable for the purpose of reaching agreement, the competent authorities may meet together for an oral exchange of opinions.

Article 26
EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1 (Personal Scope). Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment, collection, or administration of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2.
In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:
(a)
to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;
(b)
to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;
(c)
to supply information which would disclose any trade, business, industrial, commercial, or professional secret or trade process, or information the disclosure of which would be contrary to public policy.
3.
If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall obtain the information to which the request relates in the same manner and to the same extent as if the tax of the first-mentioned State were the tax of that other State and were being imposed by that other State. If specifically requested by the competent authority of a Contracting State, the competent authority of the other Contracting State shall provide information under this Article in the form of depositions of witnesses and authenticated copies of unedited original documents (including books, papers, statements, records, accounts, and writings), to the same extent such depositions and documents can be obtained under the laws and administrative practices of that other State with respect to its own taxes.
4.
The exchange of information shall be either on a routine basis or on request with reference to particular case. The competent authorities of the Contracting States may agree on the list of information which shall be furnished on a routine basis.
5.
The competent authorities of the Contracting States shall notify each other of the publication by their respective Contracting States of any material concerning the application of this Convention, whether in the form of legislation, regulations, rulings, or judicial decisions by transmitting in the ensuing calendar year the texts of any such materials adopted in the course of any given calendar year.
6.
For the purposes of this Article, the Convention shall apply, notwithstanding the provisions of Article 2 (Taxes Covered, to taxes of every kind imposed by a Contracting State.

Article 27
DIPLOMATIC AND CONSULAR OFFICERS
Nothing in this Convention shall affect the fiscal privileges of diplomatic and consular officials under the general rules of international law or under the provisions of special agreements.

Article 28
GENERAL RULES OF TAXATION
1.
A resident of one of the Contracting States may be taxed by the other Contracting State on any income from sources within that other Contracting State and only on such income, subject to any limitations set forth in this Convention. For this purpose, the rules set forth in Article 7 (Source of Income) shall be applied to determine the source of income.
2.
The provisions of this Convention shall not be construed to restrict in any manner any exclusion, exemption, deduction, credit, or other allowance now or hereafter accorded :
(a)
by the laws of one of the Contracting States in the determination of the tax imposed by that Contracting State, or
(b)
by any other agreement between the Contracting States.
3.
Notwithstanding any provisions of this Convention except paragraph 4, a Contracting State may tax a citizen or resident of that Contracting State as if this Convention had not come into effect. For this purpose the term "citizen" shall include a former citizen whose loss of citizenship had as one of the principal purposes the avoidance of tax but only for a period of ten years following such loss.
4.
The provisions of paragraph 3 shall not affect:
(a)
the benefits conferred by a Contracting State under paragraph 3 of Article 10 (Related Persons), paragraph 3 of Article 21 (Private Pensions and Annuities), Articles 22 (Social Security Payments), 23 (Relief from Double Taxation), 24 (Non-Discrimination), and 25 (Mutual Agreement Procedure); and
(b)
the benefits conferred by a Contracting State under Article 18 (Government Service), 19 (Students and Trainees), 20 (Teachers and Researchers), and 27 (Diplomatic and Consular Officers), upon individuals who are neither citizens of, nor have immigrant status in, that Contracting State.
5.
The competent authorities of the Contracting States may each prescribe regulations necessary to carry out the provisions of this Convention.
6.
Except as provided in paragraph 7, a person (other than an individual) which is a resident of a Contracting State shall not be entitled under this Convention to relief from taxation in the other Contracting State unless:

(a)
more than 50 percent of the beneficial interest in such person (or in the case of a company, more than 50 percent of the number of shares of each class of the company's shares) is owned, directly or indirectly, by any combination of one or more of:
(i)
individuals who are residents of the United States;
(ii)
citizens of the United States;
(iii)
individuals who are residents of Indonesia;
(iv)
companies as described in paragraph 7(a); and
(v)
the Contracting States; and
(b)
the income of such person is not used in substantial part, directly or indirectly, to meet liabilities (including liabilities for interest or royalties) to persons other than those enumerated in subparagraphs (a)(i) through (v).
7.
The provisions of paragraph 6 shall not apply if:
(a)
the person is a company in whose principal class of shares there is substantial and regular trading on a recognized stock exchange; or
(b)
the establishment, acquisition and maintenance of such person and the conduct of its operations did not have as a principal purpose the purpose of obtaining benefits under the Convention.
8.
For the purposes of paragraph 7(a), the term "a recognized stock exchange" means:
(a)
the NASDAQ System owned by the National Association of Securities Dealers, Inc., and any stock exchange registered with the Securities and Exchange Commission as a national securities exchange for the purposes of the Securities Exchange Act of 1934; and
(b)
the Jakarta stock exchange; and
(c)
any other stock exchange agreed upon by the competent authorities of the Contracting States.

Article 29
ASSISTANCE IN COLLECTION
1.
Each of the Contracting States shall endeavor to collect on behalf of the other Contracting State such taxes imposed by that other Contracting State as well ensure that any exemption or reduced rate of tax granted under this Convention by that other Contracting State shall not be enjoyed by persons not entitled to such benefits. The competent authorities of the Contracting States may consult together for the purposes of giving effect to this Article.
2.
In no case shall this Article be construed so as to impose upon a Contracting State the obligation to carry out administrative measures at variance with the regulations and practices of either Contracting State or which would be contrary to the first-mentioned Contracting State's sovereignty, security, or public policy.

Article 30
ENTRY INTO FORCE
This Convention shall be subject to ratification and instruments of ratification shall be exchanged at Washington as soon as possible. It shall enter into force one month after the date of exchange of the instruments of ratification. The provisions shall for the first time have effect with respect to taxes withheld at source in accordance with Articles 11 (Dividends), 12 (Interest), and 13 (Royalties), for amounts paid or credited on or after the first day of the second month next following the date on which the Convention enters into force, and with respect to other taxes for calendar years or taxable years beginning on or after January 1 of the year in which this Convention enters into force.

Article 31
TERMINATION
This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention at any time after 5 years from the date on which the Convention enters into force provided that at least 6 months' prior notice of termination has been given through diplomatic channels. In such event, the Convention shall cease to have force and effect as respects income of calendar years or taxable years beginning (or, in the case of taxes payable at the source, payment made on or after January 1 next following the expiration of the 6-month period.
DONE at Jakarta, in duplicate, in the English language, this eleventh day of July 1988.
For the Government of
the Republic of Indonesia;
For the Government of
the United States of America;


PROTOCOL
At the moment of signing the Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion, the undersigned have agreed upon the following understandings:
 
It is agreed that the provisions of this Convention do not prejudice the legal rights of residents of a Contracting State concerning the taxation by the other Contracting State of income from the operation of ships or aircraft in international traffic with respect to taxable years beginning before January 1 of the year in which this Convention enters into force.
 
 
Ad Article 5, paragraph 3
 
It is agreed that for purposes of this paragraph the term "permanent establishment" shall not be deemed to include the use of facilities or the maintenance of a stock of goods or merchandise belonging to the enterprise for the purpose of occasional delivery of such goods or merchandise.
 
 
Ad Article 11, paragraph 4
 
It is agreed that the tax on interest payments permitted by this paragraph will apply, in the case of the United States, to the excess, if any, of interest deducted in determining the profits of the permanent establishment over the actual payments of interest by the permanent establishment. A permanent establishment may deduct an allocable portion of the interest expense of the home office. Where that deduction exceeds the amount of interest actually paid by the permanent establishment, the excess deduction is treated as if it were remitted to the home office subject to the additional tax under this paragraph.
 
Done at Jakarta, in duplicate, in the English language, this 11th day of July, 1988.


For the Government of
the Republic of Indonesia;
For the Government of
the United States of America;

Indonesia - United Kingdom Tax Treaty

AGREEMENT BETWEEN
THE GOVERNMENT OF THE REPUBLIC OF INDONESIA
AND
THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND
FOR
THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

Article 1
PERSONAL SCOPE
This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
TAXES COVERED
1.
The taxes which are the subject of this Agreement are:
(a)
in the United Kingdom:
(i)
the income tax;
(ii)
the corporation tax; and
(iii)
the capital gains tax;
(hereinafter referred to as "United Kingdom tax");
(b)
in Indonesia:
the income tax (Pajak Penghasilan 1984), and to the extent provided in such income tax, the company tax (Pajak Perseroan 1925), and the tax on interest, dividends and royalties (Pajak Atas Bunga, Dividen dan Royalty 1970);
(hereinafter referred to as "Indonesian tax").
2.
This Agreement shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Agreement in addition to, or in place of the taxes referred to in paragraph 1 of this Article. The competent authorities of the Contracting States shall notify each other of any substantial changes which are made in their respective taxation laws.

Article 3
GENERAL DEFINITIONS
1.
In this Agreement, unless the context otherwise requires:
(a)
the term "United Kingdom of Great Britain and Northern Ireland" means the territory of Great Britain and Northern Ireland, including any maritime area situated beyond the territorial waters of the United Kingdom within which the United Kingdom of Great Britain and Northern Ireland may exercise rights with regard to the seabed and subsoil and the natural resources in accordance with international law;
(b)
the term "Indonesia" means the territory under the sovereignty of the Republic of Indonesia and such parts of the Continental Shelf and the adjacent seas, over which the Republic of Indonesia has sovereignty, sovereign rights as well as other rights in accordance with international law;
(c)
the term "national" means:
(i)
in relation to the United Kingdom, any British citizen or any British subject not possessing the citizenship of any other Commonwealth country or territory, provided he has the right of abode in the United Kingdom; and any legal person, partnership, association or other entity deriving its status as such from the law in force in the United Kingdom;
(ii)
in relation to Indonesia, any individual possessing the nationality of Indonesia, and any juridical person created or organised under the laws of Indonesia and any organisation without juridical personality treated for the purposes of Indonesian tax as a juridical person created or organised under the laws of Indonesia;
(d)
the terms "a Contracting State" and "the other Contracting State" mean the United Kingdom or Indonesia as the context requires;
(e)
the term "person" comprises an individual, a company and any other body of persons, but subject to paragraph 2 of this Article does not include a partnership;
(f)
the term "company" means any body corporate or any entity which is treated as a body corporate for tax purposes;
(g)
the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;
(h)
the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;
(i)
the term "competent authority" means, in the case of the United Kingdom the Commissioners of Inland Revenue or their authorised representative, and in the case of Indonesia the Minister of Finance or his authorised representative.
2.
A partnership deriving its status from Indonesian law which is treated as a taxable unit under the law of Indonesia shall be treated as a person for the purposes of this Agreement.
3.
As regards the application of this Agreement by a Contracting State any term not otherwise defined shall, unless the context otherwise requires, have the meaning which it has under the laws of that Contracting State relating to the taxes which are the subject of this Agreement.

Article 4
FISCAL DOMICILE
1.
For the purposes of this Agreement, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of similar nature.
2.
Where by reason of the provisions of paragraph 1 of this Article an individual is a resident of both Contracting States, then his status shall be determined in accordance with the following rules:
(a)
he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
(b)
if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c)
if he has an habitual abode in both Contracting States or in neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
3.
Where by reason of the provisions of paragraph 1 of this Article a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.
4.
The fact that an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein shall not constitute either the enterprise or the permanent establishment a resident of that other State.

Article 5
PERMANENT ESTABLISHMENT
1.
For the purposes of this Agreement, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
2. The term "permanent establishment" includes especially:
(a) a place of management;
(b) a branch;
(c) an office;
(d) a factory;
(e) a workshop; and
(f)
a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
3.
The term "permanent establishment" likewise includes:
(a)
a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than 183 days;
(b)
the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or connected project) within the Contracting State for a period or periods aggregating more than 91 days within any continuous period of twelve months.
4.
Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:
(a)
the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;
(b)
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;
(c)
the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;
(d)
the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;
(e)
the maintenance of a fixed place of business solely for the purpose of advertising, supply of information, scientific research or any other activity of a preparatory or auxiliary character, for the enterprise;
(f)
the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.
5.
A person acting in a Contracting State on behalf of an enterprise of the other Contracting State, other than an agent of an independent status to whom the provisions of paragraph 7 of the Article apply, shall be deemed to be a permanent establishment in the first-mentioned State if:
(a)
he has, and habitually exercises in that State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or
(b)
he maintains in the first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders on behalf of the enterprise.
6.
An insurance enterprise of a Contracting State shall, except with regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated there through an employee or through a representative established there who is not an agent of an independent status within the meaning of paragraph 7 of this Article.
7.
An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carried on business in that other State through a broker, general commission agent or any other agent of an independent status, where such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly to the business of that enterprise, he shall not be considered an agent of an independent status within the meaning of this paragraph.
8.
The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6
INCOME FROM IMMOVABLE PROPERTY
1.
Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
2.
The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.
3.
The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of immovable property.
4.
The provisions of paragraphs 1 and 3 of this Article shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.

Article 7
BUSINESS PROFITS
1.
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is directly or indirectly attributable to that permanent establishment.
2.
Where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.
3.
In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including a reasonable allocation of executive and general administrative expenses incurred for the purposes of the enterprise as a whole, whether in the Contracting State in which the permanent establishment is situated or elsewhere.
4.
Insofar as it has been customary in a Contracting State, according to its law, to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profit of the enterprise to its various parts, nothing in paragraph 2 of this Article shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles laid down in this Article.
5.
No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.
6.
For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.
7.
Where profits include items which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
SHIPPING AND AIR TRANSPORT
1.
Profits derived by a resident of a Contracting State from international traffic shall be taxable only in that State.
2.
Where profits within paragraph 1 of this Article are derived by a resident of a Contracting State from participation in a pool, a joint business or an international operating agency, the profits attributable to that resident shall be taxable only in the Contracting State of which he is a resident.

Article 9
ASSOCIATED ENTERPRISES
Where:
(a)
an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or
(b)
the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

Article 10
DIVIDENDS
1. (a) (i)
Dividends paid by a company which is a resident of the United Kingdom to a resident of Indonesia may be taxed in Indonesia.
(ii)
Where a resident of Indonesia is entitled to a tax credit in respect of such a dividend under subparagraph (b) of this paragraph, tax may also be charged in the United Kingdom and according to the laws of the United Kingdom on the aggregate of the amount or value of that dividend and the amount of that tax credit at a rate not exceeding 15%.
(iii)
Except as aforesaid dividends paid by a company which is a resident of the United Kingdom to a resident of Indonesia who is the beneficial owner of the dividends shall be exempt from any tax in the United Kingdom which is chargeable on dividends.
(b)
A resident of Indonesia who receives a dividend from a company which is a resident of the United Kingdom shall, subject to the provisions of subparagraph (c) of this paragraph and provided he is the beneficial owner of the dividend, be entitled to the tax credit in respect thereof to which an individual resident in the United Kingdom would have been entitled had he received that dividend and to the payment of any excess of that tax credit over his liability to United Kingdom tax.
(c)
The provisions of subparagraph (b) of this paragraph shall not apply where the beneficial owner of the dividend is, or is associated with, a company which, either alone or together with one or more associated companies, controls, directly or indirectly, at least 10% of the voting power in the company paying the dividend. For the purposes of this subparagraph, two companies shall be deemed to be associated if one controls, directly or indirectly, more than 50% of the voting power in the other company, or a third company controls more than 50% of the voting power in both of them.
2.
Dividends paid by a company which is a resident of Indonesia to a resident of the United Kingdom may be taxed in the United Kingdom. Such dividends may also be taxed in Indonesia and according to the laws of Indonesia, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:
(a)
10% of the gross amount of the dividends if the beneficial owner is a company which controls, directly or indirectly, at least 15% of the voting power in the company paying the dividends;
(b)
in all other cases 15% of the gross amount of the dividends.
3.
The preceding paragraphs of this Article shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.
4.
The term "dividends" as used in this Article means income from shares, or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights assimilated to income from shares by the taxation laws of the State of which the company making the distribution is a resident and also includes any other item which, under the laws of the Contracting State of which the company paying the dividend is a resident, is treated as a dividend or distribution of a company.
5.
The provisions of paragraph 1 or, as the case may be, 2 of this Article shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14 of this Agreement, as the case may be, shall apply.
6.
Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company's undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in that other State.
7.
Notwithstanding the other provisions of this Agreement, where a company which is a resident of a Contracting State, having a permanent establishment in the other Contracting State, derives profits through that permanent establishment, such profits may be taxed (in addition to the tax which would be chargeable on those profits if they were the profits of a company which was a resident of that other Contracting State) in accordance with the laws of the other Contracting State but the rate of tax so imposed shall not exceed 10% of the profits of the permanent establishment after payment of the income tax on those profits.
8.
The provisions of paragraph 7 of this Article shall not affect the provisions contained in any production sharing contracts and contracts of work (or any similar contracts) relating to the oil or gas sector or other mining sector entered into by a resident of the United Kingdom with the Government of Indonesia, its instrumentality, its relevant state oil and gas company or any other entity thereof, provided such contracts:
(a)
were concluded on or before 31st December 1983; or
(b)
were being negotiated at 31st December 1983 and the Minister of Finance of Indonesia determined before the date of signature of this Agreement that the profits or income arising from such contracts should be taxed in Indonesia in accordance with the laws in force in Indonesia at 31st December 1983.

Article 11
INTEREST
1.
Interest arising in a Contracting State which is derived by a resident of the other Contracting State may be taxed in that other State.
2.
However, such interest may also be taxed in the Contracting State in which it arises, and according to the law of that State; but where the beneficial owner of such interest is a resident of the other Contracting State the tax so charged shall not exceed 10% of the gross amount of the interest.
3.
Notwithstanding the provisions of paragraph 2 of this Article, interest arising in a Contracting State shall be exempt from tax in that State if:
(a)
it is derived and beneficially owned by the Government of the other Contracting State, or a political subdivision or a local authority thereof, or the central bank of that other State, or by any agency or instrumentality of, or any financial institution wholly owned by, that Government; or
(b)
it is paid in respect of a loan made, guaranteed or insured, or any other debt-claim or credit guaranteed or insured by the Government of the other Contracting State, or a political subdivision or a local authority of, or the central bank of that other State, or any agency or instrumentality of, or any financial institution wholly owned by, that Government.
4.
For the purposes of paragraph 3 of this Article, the terms "central bank", "agency", "instrumentality" and "financial institution wholly owned by that Government" mean:
(a)
in the case of the United Kingdom:
(i)
the Bank of England;
(ii)
the United Kingdom Export Credits Guarantee Department;
(iii)
the Commonwealth Development Corporation; and
(iv)
such other agencies or instrumentalities of, and such other financial institutions wholly owned by, the Government of the United Kingdom as may be agreed from time to time between the competent authorities of the Contracting States;
(b)
in the case of Indonesia:
(i)
the Bank of Indonesia; and
(ii)
such other agencies or instrumentalities of, and such other financial institutions wholly owned by, the Government of the Republic of Indonesia as may be agreed from time to time between the competent authorities of the Contracting States.
5.
The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage, and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures but shall not include any item which is treated as a distribution under the provisions of Article 10 of this Agreement.
6.
The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14 of this Agreement, as the case may be, shall apply.
7.
Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest paid was incurred, and such interest is borne by that permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
8.
Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.
9.
The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

Article 12
ROYALTIES
1.
Royalties arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.
2.
However, such royalties may also be taxed in the Contracting State in which they arise and according to the law of that State; but where the beneficial owner of such royalties is a resident of the other Contracting State the tax so charged shall not exceed:
(a)
in the case of royalties referred to in subparagraph (a) of paragraph 3 of this Article, 15% of the gross amount of the royalties; and
(b)
in the case of royalties referred to in subparagraph (b) of paragraph 3 of this Article, 10% of the gross amount of the royalties.
3.
The term "royalties" as used in this Article comprises:
(a)
payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work, including cinematograph films, and films or tapes for radio or television broadcasting, or any patent, know-how, trade mark, design or model, plan, secret formula or process; and
(b)
payments of any kind received as a consideration for the use of, or the right to use, any industrial, commercial or scientific equipment.
4.
The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case, the provisions of Article 7 or Article 14 of this Agreement, as the case may be, shall apply.
5.
Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by that permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
6.
Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.
7.
The provisions of this Article shall not apply if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the right or property in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.

Article 13
CAPITAL GAINS
1.
Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 of this Agreement and situated in the other Contracting State may be taxed in that other State.
2.
Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a fixed base, may be taxed in that other State.
3.
Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall be taxable only in that State.
4.
Gains from the alienation of any property other than that mentioned in paragraphs 1, 2 and 3 of this Article shall be taxable only in the Contracting State of which the alienator is a resident.
5.
The provisions of paragraph 4 of this Article shall not affect the right of a Contracting State to levy according to its law a tax on capital gains from the alienation of any property derived by an individual who is a resident of the Contracting State and has been a resident of the first-mentioned Contracting State at any time during the five years immediately preceding the alienation of the property.

Article 14
INDEPENDENT PERSONAL SERVICES
1.
Income derived by a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State unless:
(a)
he has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities; in that case only so much of the income as is attributable to that fixed base may be taxed in that other State; or
(b)
his stay in the other Contracting State is for a period or periods amounting to or exceeding in the aggregate 91 days in any continuous period of twelve months; in that case only so much of the income as is derived from his activities performed in that other State may be taxed in that other State.
2.
The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.

Article 15
DEPENDENT PERSONAL SERVICES
1.
Subject to the provisions of Articles 16, 17, 18, 19 and 20 of this Agreement, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.
2.
Notwithstanding the provisions of paragraph 1 of this Article, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
(a)
the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days within any continuous period of twelve months; and
(b)
the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and
(c)
the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.
3.
Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State of which the person deriving the profits from the operation of the ship or aircraft is a resident.

Article 16
DIRECTORS' FEES
1.
Directors' fees and similar payments derived by a resident of the United Kingdom in his capacity as a "pengurus" or a "komisaris" of a company which is a resident of Indonesia may be taxed in Indonesia.
2.
Directors' fees and similar payments derived by a resident of Indonesia in his capacity as a member of the board of directors of a company which is a resident of the United Kingdom may be taxed in the United Kingdom.

Article 17
ARTISTES AND ATHLETES
1.
Notwithstanding the provisions of Articles 14 and 15 of this Agreement, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.
2.
Where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such accrues not to the entertainer or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15 of this Agreement, be taxed in the Contracting State in which the activities of the entertainer or athlete are exercised.
3.
Notwithstanding the provisions of paragraphs 1 and 2 of this Article, income derived from activities referred to in paragraph 1 performed under a cultural agreement or arrangement between the Contracting States shall be exempt from tax in the Contracting State in which the activities are exercised if the visit to that State is wholly or substantially supported by funds of the other Contracting State, a political subdivision, a local authority or public institution thereof.

Article 18
PENSIONS
1.
Subject to the provisions of paragraph 2 of Article 19 of this Agreement, any pension or other similar remuneration paid to a resident of one of the Contracting States from a source in the other Contracting State in consideration of past employment or services in that other Contracting State and any annuity paid to such a resident from such a source may be taxed in that other State.
2.
The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.

Article 19
GOVERNMENT SERVICE
1. (a)
Remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b)
However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who: 
(i)
is a national of that State; or
(ii)
did not become a resident of that State solely for the purpose of rendering the services.
2. (a)
Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.
(b)
However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.
3.
The provisions of Articles 15, 16 and 18 of this Agreement shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.


Article 20
STUDENTS
1.
An individual who is or was a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in that other Contracting State solely as a student at a university, college, school or other similar recognised educational institution in that other Contracting State or as a business or technical apprentice therein, shall be exempt from tax in that other Contracting State on:
(a)
all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and
(b)
any income derived from the other Contracting State in respect of services rendered in that other Contracting State (other than any rendered by a business or technical apprentice to the person or partnership to whom he is apprenticed), with a view to supplementing the resources available to him for such purposes, not exceeding the sum of , 500 sterling in the case of the United Kingdom, or the equivalent in Indonesian currency in the case of Indonesia, during any year of assessment.
2.
An individual who is or was a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in that other Contracting State for the purposes of study, research or training solely as a recipient of a grant, allowance or award from the Government of either of the Contracting States or from a scientific, educational, religious or charitable organisation or under a technical assistance programme entered into by the Government of either of the Contracting States for a period not exceeding two years from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on:
(a)
the amount of such grant, allowance or award; and
(b)
any income derived from that other Contracting State in respect of services in that other Contracting State if the services are performed in connection with his study, research, or training or are incidental thereto.
3.
An individual who is or was a resident of a Contracting State immediately before making a visit to the other Contracting State and is temporarily present in that other Contracting State solely as an employee of, or under contract with, the Government or an enterprise of the first-mentioned Contracting State for the purpose of acquiring technical, professional or business experience for a period not exceeding twelve months from the date of his first arrival in that other Contracting State in connection with that visit shall be exempt from tax in that other Contracting State on:
(a)
all remittances from the first-mentioned Contracting State for the purposes of his maintenance, education or training; and
(b)
any remuneration, so far as it is not in excess of , 500 sterling or the equivalent in Indonesian currency, as the case may be, for personal services rendered in that other Contracting State, provided such services are in connection with his studies or training or are incidental thereto.
Provided that the benefits under this paragraph shall not be granted if the technical, professional or business experience is acquired from a company controlled directly or indirectly by the Government or the enterprise which sent the employee or the person under contract.

Article 21
ELIMINATION OF DOUBLE TAXATION
1.
Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom (which shall not affect the general principle hereof):
(a)
Indonesian tax payable under the laws of Indonesia and in accordance with this Agreement, whether directly or by deduction, on profits, income or chargeable gains from sources within Indonesia (excluding in the case of a dividend, tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Indonesian tax is computed;
(b)
in the case of a dividend paid by a company which is a resident of Indonesia to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10% of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Indonesian tax for which credit may be allowed under the provisions of subparagraph (a) of this paragraph) the Indonesian tax payable by the company in respect of the profits out of which such dividend is paid.
2.
Where a resident of Indonesia derives income from the United Kingdom and such income may be taxed in the United Kingdom in accordance with the provisions of this Agreement, the amount of United Kingdom tax payable in respect of the income shall be allowed as a credit against the Indonesian tax imposed on that resident. The amount of credit, however, shall not exceed that part of the Indonesian tax which is appropriate to such income.
3.
For the purposes of paragraph 1 of this Article, the term "Indonesian tax payable" shall be deemed to include any amount which would have been payable as Indonesian tax for any year but for an exemption or reduction of tax granted for the year or any part thereof under Article 15(5) and Article 16(1) and (2) of Law No. 1 of 1967 of Indonesia to the extent that these provisions continue in force by virtue of Article 33(2)(a) of Act No. 7 of 1983 of Indonesia.
Provided that relief from United Kingdom tax shall not be given by virtue of this paragraph in respect of income from any source if the income arises in a period starting more than 10 years after the exemption from, or reduction of, Indonesian tax was first granted in respect of that source.
4.
For the purposes of paragraphs 1 and 2 of this Article, profits, income and capital gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Agreement shall be deemed to arise from sources in that other Contracting State.
5.
Where profits on which an enterprise of a Contracting State has been charged to tax in that State are also included in the profits of an enterprise of the other State and the profits so included are profits which would have accrued to that enterprise of the other State if the conditions made between the enterprises had been those which would have been made between independent enterprises dealing at arm's length, the amount included in the profits of both enterprises shall be treated for the purposes of this Article as income from a source in the other State of the enterprise of the first-mentioned State and relief shall be given accordingly under the provisions of paragraph 1 or paragraph 2 of this Article.

Article 22
PARTNERSHIPS
Where, under any provision of this Agreement, a partnership is entitled, as a resident of Indonesia, to exemption from tax in the United Kingdom on any income or capital gains, that provision shall not be construed as restricting the right of the United Kingdom to tax any member of the partnership who is a resident of the United Kingdom on his share of such income or capital gains; but any such income or gains shall be treated for the purposes of Article 21 of this Agreement as income or gains from sources in Indonesia.

Article 23
NON-DISCRIMINATION
1.
Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or requirement connected therewith which is other or more burdensome than the taxation or connected requirements to which nationals of that other State in the same circumstances are or may be subjected.
2.
Subject to the provisions of paragraphs 7 and 8 of Article 10 of this Agreement, the taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.
3.
Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned State are or may be subjected.
4.
Nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident.
5.
In this Article the term "taxation" means taxes which are the subject of this Agreement.
Article 24
MUTUAL AGREEMENT PROCEDURE
1.
Where a resident of a Contracting State considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with this Agreement, he may, notwithstanding the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident.
2.
The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Agreement.
3.
The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.
4.
The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 25
EXCHANGE OF INFORMATION
1.
The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws of the Contracting States concerning taxes covered by the Agreement insofar as the taxation thereunder is not contrary to the Agreement. Any information received by a Contracting State shall be treated as secret and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.
2.
In no case shall the provisions of paragraph 1 of this Article be construed so as to impose on the competent authority of either Contracting State the obligation:
(a)
to carry out administrative measures at variance with laws and administrative practice prevailing in either Contracting States;
(b)
to supply information which is not obtainable under the laws or in the normal course of the administration of either Contracting State;
(c)
to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

Article 26
DIPLOMATIC AGENTS AND CONSULAR OFFICIALS
1.
Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic or permanent missions or consular posts under the general rules of international law or under the provisions of special agreements.
2.
Notwithstanding the provisions of paragraph 1 of Article 4, an individual who is a member of the diplomatic or permanent mission or consular post of a Contracting State or any third State which is situated in the other Contracting State and who is subject to tax in that other State only if he derives income from sources therein, shall not be deemed to be a resident of that other State.

Article 27
ENTRY INTO FORCE
1.
Each of the Contracting States shall notify to the other the completion of the procedure required by its law for the bringing into force of this Agreement.
2.
The Agreement shall enter into force on the date of the later of these notifications and shall thereupon have effect:
(a)
in the United Kingdom:
(i)
as respects income tax and capital gains tax, for any year of assessment beginning on or after 6th April;
(ii)
as respects corporation tax, for any financial year beginning on or after 1st April;
(b)
in Indonesia:
as respects income derived during any fiscal year beginning on or after 1st January; in either case in the calendar year next following that in which the later of such notifications is given.
3.
The Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Indonesia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and Capital signed at Jakarta on 13th March 1974 shall terminate and cease to be effective from the date upon which this Agreement has effect in respect of the taxes to which this Agreement applies in accordance with the provisions of paragraph 1 of this Article.

Article 28
TERMINATION
This Agreement shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Agreement by giving notice of termination, through the diplomatic channel, at least six months before the end of any calender year beginning after the expiration of five years from the date of entry into force of the Agreement. In such event, the Agreement shall cease to have effect:
(a)
in the United Kingdom:
(i)
as respects income tax and capital gains tax, for any year of assessment beginning on or after 6th April in the calendar year next following that in which the notice is given;
(ii)
as respects corporation tax, for any financial year beginning on or after 1st April in the calendar year next following that in which the notice is given; and
(b)
in Indonesia:
as respects income derived during any fiscal year beginning on or after 1st January in the calendar year next following that in which the notice is given.
In witness whereof the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.
 
Done in duplicate at Jakarta this 5th day of April, 1993.
For the Government of
the Republic of Indonesia
For the Government of
United Kingdom of Great Britain 
and Northern Ireland

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