Indonesia's protocol to its agreement with the Netherlands
for the avoidance of double taxation (DTA) is effective from
October 1 2017.
The Indonesian President issued Presidential Regulation No.
24 of 2017 on March 9 2017 to ratify the protocol to the DTA,
signed in Jakarta on July 30 2015 (PR No. 24/2017), which
amends the DTA signed on January 29 2002 in Jakarta. The key
amendments , which are effective from October, include, among
- The withholding tax (WHT) rate on gross
dividend is revised from 10% to 5% if the beneficial owner is
a company (other than a partnership) that directly holds at
least 25% of capital of the company paying the dividends.
Otherwise, a maximum of 15% rate shall apply;
- The WHT rate on interest paid on a loan
made for a period of more than two years or paid in relation
to sale of credit of any industrial, commercial or scientific
fittings is revised from 0% to 5%; and
- Expansion of coverage of exchange of
information, which increases the ability of a competent
authority (CA) to request information on matters previously
not available to them.
Furthermore, on August 4 2017, Indonesia's President also
issued Presidential Regulation No. 77 of 2017 to ratify the
protocol amending the DTA between Indonesia and Malaysia, which
was signed in Kuala Lumpur on September 12 1991, as amended by
the protocol signed in Bukit Tinggi on January 12 2006 (PR No.
77/2017). PR No. 77/2017 ratified the latest protocol amending
the Indonesia-Malaysia DTA, which was signed on October 20 2011
in Lombok, West Nusa Tenggara. The key amendment includes
expanding the coverage of the exchange of information
provision, which increases the ability of a CA to request
information on matters previously not available to them.
On a separate occasion, the Directorate General of Tax
issued Circular Letter No. SE-19/PJ/2017 on July 26 2017
concerning the entry into force of the DTA between Indonesia
and Armenia. The circular stated that the Indonesia-Armenia
DTA, signed on October 13 2005 in Jakarta, is applicable from
April 8 2016. However, the provisions under the
Indonesia-Armenia DTA will only be effective on the following
- For taxes imposed in the origin countries,
on income received on or after January 1 2017; and
- For taxes on income and other capital, on
the fiscal year commencing on or after January 1 2017.
The applicable WHT rates under the Indonesia-Armenia DTA are
- Dividends received by an Armenian
beneficial owner: 10% on gross dividends if the recipient is
a company directly holding at least 25% of capital of the
company paying the dividends. Otherwise, a 15% rate shall
- Interest received by an Armenian
beneficial owner: 10% on gross interest;
- Royalties received by an Armenian
beneficial owner: 10% on gross royalties; and
- Branch profit tax: 10% on profits of a
permanent establishment after deduction of income tax. This
rate will not affect provisions in each production sharing
contract and working contract (or other similar contracts)
related to oil and gas or other mining sector entered into by
the Indonesian government/relevant oil and gas company or
other entity and Armenian citizens or entities.
If the Armenian receiving dividends, interest, or royalties
is not a beneficial owner, a WHT rate of 20% shall apply.
Freddy Karyadi (firstname.lastname@example.org)
and Nina Cornelia Santoso (email@example.com),
Ali Budiardjo, Nugroho, Reksodiputro, Law
Tel: +62 21 250 5125