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TMI BlogAgreement between the Republic of India and the Republic of Indonesia for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on incomeX X X X Extracts X X X X X X X X Extracts X X X X ..... IC OF INDIA AND THE REPUBLIC OF INDONESIA FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME. The Government of the Republic of India and the Government of the Republic of Indonesia, DESIRING to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, HAVE AGREED as follows: 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 to which this Agreement shall apply are: (a) in India: (i) the income-tax including any surcharge thereon imposed under the Income-tax Act, 1961 (43 of 1961); (ii) the surtax imposed under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (hereinafter referred to as " Indian Tax "). (b) in Indonesia: the income-tax imposed under the Undang-undang Pajak Penghasilan 1984 (Law No. 7 of 1983) and to the extent provided in such income-tax law, the company tax imposed under the Ordonansi Pajak Perseroan 1925 (State Gazette No. 319 of 1925 as lastly amended by Law No. 8 of 1970) and the tax i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 India, the Central Government in the Ministry of Finance (Department of Revenue) or their authorised representative; and in the case of Indonesia, the Minister of Finance or his authorised representative; (j) the term " national " means any individual, possessing the nationality of a Contracting State and any legal person, partnership or association deriving its status from the laws in force in the Contracting State. 2. As regards the application of the Agreement by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has under the law of that State concerning the taxes to which the Agreement applies. ARTICLE 4 RESIDENT 1. For the purposes of this Agreement, the term " resident of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 adverstising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character for the enterprise. 4. Where a person (other than an agent of an independent status to whom the provisions of paragraph 7 apply) is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned State in respect of any activities which that person undertakes for the enterprise, if: (a) that person has, and ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te. 2. The term " immovable property " shall have the meaning which it has under the law 2[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 shall also 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 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 thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In so far as it has been customary in a contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 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 contained 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 of income 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 an enterprise of a Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , due regard shall be had to the other provisions of the agreement and the competent authorities of the Contracting States shall, if necessary, consult each other. ARTICLE 10 DIVIDENDS 1. Dividends paid by a company which is resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. 2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends, the tax so charged shall not exceed: (a) 10 per cent. of the gross amount of dividends if the beneficial owner is a company which owns at least twenty five per cent. of the shares of the company paying the dividends; (b) 15 per cent. of the gross amount of the dividends in all other cases. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid. 3. 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 which is subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting State shall be exempt from tax in that Contracting State to the extent approved by the Government of that State if it is derived and beneficially owned by any person (other than a person referred to in sub-paragraph (a) who is a resident of the other Contracting State provided that the transaction giving rise to the debt-claim has been approved in this regard by the Government of the first-mentioned Contracting State. 4. The term " interest " as used in this article means income from debt-claim of every kind (including interest on deferred payment sales), 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, including premiums and prizes attaching to such securities, bonds or 6[debentures. Penalty charges] for late payment shall not be regarded as interest for the purpose of this article. 5. The provisions of paragraphs 1 and 2 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience. 4. The provisions of paragraphs 1 and 2 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, 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 sub-division, 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 liability to pay the royalties was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed 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 91 days in any twelve 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 independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, surgeons, lawyers, engineers, architects, dentists and accountants. ARTICLE 15 DEPENDENT PERSONAL SERVICES 1. Subject to the provisions of articles 16, 17, 18, 19, 20 and 21, 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its political sub-divisions or local authorities, or (b) the activities in the other Contracting State are in pursuance of a special programme for cultural exchange agreed upon between the Governments of the two Contracting State. 4. Notwithstanding the provisions of paragraph 2 and articles 7, 14 and 15, where income in respect of personal activities exercised by an entertainer or an athlete in his capacity as such in a Contracting State accrues not to the entertainer or athlete himself but to another person, that income shall be taxable only in the other Contracting State, if: (a) that other person is supported wholly or substantially from the public funds of that other State, including any of its political sub-divisions or local authorities, or (b) the activities are exercised by an individual, being a resident of the other Contracting State, in pursuance of a special programme for cultural exchange agreed upon between the Governments of the two Contracting States and that other person to whom income therefrom accrues is a resident 9[of] the other Contracting State. ARTICLE 18 REMUNERATION AND PENSIONS IN RESPECT OF GOVERNMENT SERVICE 1. Remuneration, other than pensio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate and who is present in that other State solely for the purpose of his education or training, shall be exempt from tax in that other State on: (a) payments made to him by persons residing outside that other State for the purposes of his maintenance, education or training; and (b) remuneration from employment in that other State, in an amount not exceeding Rs. 20,000 or 10[R. p. 2,000,000] during any twelve-month period, as the case may be, provided that such employment is directly related to his studies or is undertaken for the purpose of his maintenance. 2. The benefits of this article shall extend only for such period of time as may be reasonable or 11[customarily] required to complete the education or training undertaken, but in no event shall any individual have the benefits of this article for more than five consecutive years from the date of his first arrival in that other Contracting State. ARTICLE 21 PROFESSORS, TEACHERS AND RESEARCH SCHOLARS 1. A professor or teacher who is or was a resident of one of the Contracting State immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the provisions of this Agreement, whether directly or by deduction, by a resident of India, in respect of profits or income arising in Indonesia, which have been subjected to tax both in India and in Indonesia, shall be allowed as a credit against the Indian tax payable in respect of such profits or income provided that such credit shall not exceed the Indian tax (as computed before allowing any such credit) which is appropriate to the profits or income arising in Indonesia. Further, where such resident is a company by which surtax is payable in India, the credit aforesaid shall be allowed in the first instance against income-tax payable by the company in India and as to the balance, if any, against surtax payable by it in India. 3. The term " Indonesian tax payable " shall be deemed to include the amount of Indonesian tax which would have been paid if the Indonesian tax had not been exempted or reduced in accordance with the special incentive measures under article 33 of law No. 7 of 1983 (Undang-undang 12[Pajak] Penghasilan 1984) which are designed to promote economic development in Indonesia, effective on the date of signature of this Agreement, or which may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 4. 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 Contracting 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 in the same circumstances. 5. In this article, the term " taxation " means taxes which are the subject of this Agreement. ARTICLE 25 MUTUAL AGREEMENT PROCEDURE 1. Where a person 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 national laws of those States, present his case to the competent authority of the Contracting State of which he is a resident. This case must be presented within three years of the date of receipt of notice of the action which gives rise to taxation not in accordance with the Agreement. 2. The Competent authority shall endeavour, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matters in respect of which such exchange of information shall be made, including, where appropriate, exchange of information regarding tax avoidance. 2. The exchange of information or documents shall be either on a routine basis or on request with reference to particular cases or both. The competent authorities of the Contracting States shall agree from time to time on the list of the information or documents which shall be furnished on a routine basis. 3. 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 or administrative practice of that or of the other Contracting State; (b) to supply information or documents which are not obtainable under the laws or in the normal course of the administration of that or of the 14[other] Contracting State; (c) to supply information or documents 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. ARTICLE 27 DIPLOMATIC AND CONSULAR ACTIVITIES Nothing in this Agreement shall affect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble taxation and prevention of fiscal evasion with respect to taxes on income, have agreed, at the time of signing the said Agreement, on the following provisions which shall constitute an integral part thereof: 1. For 19[purposes] of article 7 where a company which is a resident of a Contracting State has a permanent establishment in the other Contracting State, the profits attributable to the permanent establishment may be subjected to an additional tax in that other State in accordance with its law, but the additional tax so charged shall not exceed 10% of the amount of such profits after deducting therefrom income-tax and other taxes on income imposed thereon in that other Contracting State. 2. The provisions of paragraph 1 shall not affect the provisions contained in any production sharing contracts and contracts of work (or any other similar contracts) relating to oil and gas sector or other mining sector negotiated and concluded by the Government of Indonesia, its instrumentality, its relevant State oil and gas company or any other entity thereof before the first day of January, 1984, with a person who is resident of India. 3. The provisions of paragraph 2 of article 11 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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