Double Tax Agreement Indonesia

On 4 February 2020, at a meeting in Jakarta, Indonesia and Singapore signed the updated agreement on the elimination of double taxation (DBA) and the prevention of tax evasion. The profits of an enterprise of a Contracting State may be taxed only in that State, unless the enterprise carries on business in the other Contracting State by means of an indication of business management. However, in the other Contracting State, only the part of the profit attributable to the MOU may be taxed. For the purposes of determining the profits of the MOU, all expenses and deductions that would reasonably be attributable to PE and deductible if PE were an independent undertaking, and the profits of PE shall be determined as if it were a separate and distinct undertaking carrying out the same or similar activities under the same or similar conditions and acting independently with the undertaking, This is an MOU. The mere purchase of goods or goods by an MOU for the enterprise does not result in profits attributable to that MOU. The allocation of profits to the EP must be carried out annually according to the same method, unless there is a valid reason to the contrary. If the information available to the competent authority is insufficient, the provisions of the Agreement shall not affect the law of the Contracting State or the discretion of the competent authority. To remove obstacles to economic cooperation and trade, Singapore and Indonesia have concluded several important agreements. These include the Free Trade Agreement, the double taxation conventions and the bilateral investment convention. These are briefly described below. Capital gains were not regulated by the old DBA agreement. The provision has been added to the new DBA and will be amended in accordance with the Organisation for Economic Co-operation and Development (OECD) model.

On 4 February 2020, Indonesia and Singapore signed the updated agreement on the elimination of double taxation and the prevention of tax evasion. Once adopted, the new DBA will replace the existing DBA, which has been in force since 1992. The new DBA will reduce withholding tax rates for the subsidiary`s royalties and profits. It also contains internationally agreed standards to combat the misuse of treaty provisions by unscrupulous taxpayers. Finally, the updated tax provisions of the agreement enhance Indonesia`s attractiveness as an investment target for Singapore-based investors. The first Singapore-Indonesia double taxation convention was concluded in 1990. After nearly two years of negotiations, Singapore and Indonesia recently signed a new double taxation treaty (DBA) that will replace the old DBA. The new DBA will enter into force after being ratified by both countries. The new version amends the rules on cross-border tax rates and replaces the general rates set by the laws of both countries. . . .

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