Indonesia: Indonesia updates Asian treaty network; issues foreign customers’ exchange of information for financial institutions

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Indonesia: Indonesia updates Asian treaty network; issues foreign customers’ exchange of information for financial institutions

Karyadi-Freddy
Tanuwijaya

Freddy Karyadi

Chaterine Tanuwijaya

The Government of Indonesia, through Presidential Regulation No. 5 of 2016 effective January 12 2016, has ratified the 'Protocol to the Agreement for the Government of the Republic of Indonesia and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income' (Indonesia – China DTA).

The treaty was signed on March 26 2015. This protocol provides that aviational operation in the international traffic of the other state will be exempted from value added tax (VAT) or other similar taxes in that other state.

The government also ratified the protocol to the DTA with India by issuing Presidential Regulation No. 6 of 2016 effective January 12 2016. Among others, it contains the provision of exchange of information for tax and banking details, as well as assistance in handling outstanding tax. It is also stated that if a resident of one state has a representative office in another state, the profit of such representative office will be taxed according to the prevailing tax tariff applicable in such other state, but not more than 15%.

Earlier in December 2015, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan – OJK) issued Regulation No.25/POJK.03/2015 dated December 11 2015 on Exchange of Information for Foreign Customers related to Tax to Partner Countries/Jurisdictions. Certain financial institutions (FIs) in Indonesia will automatically exchange information to partner countries/jurisdictions, pursuant to the agreements on exchange of information including tax treaties. FIs should submit a report to the Indonesian tax authorities or to the OJK regarding information on its foreign customers, which will be forwarded to the tax authorities in the partner countries/jurisdictions. The implementation will further be regulated in a circular letter to be issued by OJK.

Freddy Karyadi (fkaryadi@abnrlaw.com) and Chaterine Tanuwijaya (ctanuwijaya@abnrlaw.com), Jakarta

Ali Budiardjo, Nugroho, Reksodiputro, Counsellors at Law

Tel: +62 021 250 5125

Website: www.abnrlaw.com

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