The Government of the Republic of Singapore and the Government of the Republic of Indonesia have entered into an agreement to avoid double taxation and to prevent fiscal evasion with respect to taxes on income. The Agreement shall apply to persons who are residents of one or both of the Contracting States.
Taxes Covered
- The Agreement shall apply to taxes on income imposed on behalf of each Contracting State, irrespective of the manner in which they are levied.
- Taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property and taxes on the total amount of wages or salaries paid by the enterprises.
The taxes at present to which this Agreement shall apply are:
In Singapore
- The income tax (hereinafter referred to as "Singapore tax");
In Indonesia
the income tax (pajak penghasilan), and, to the extent provided in such income tax, the company tax (pajak perseroan) and the tax on interest, dividends and royalties (pajak atas bunga, dividen dan royalty)
(hereinafter referred to as "Indonesian tax").
Permanent Establishment
The term "Permanent Establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.
Resident
The term "resident of a Contracting State" means:
- In the case of Indonesia, a person who is resident in Indonesia for the purposes of Indonesian tax;
- In the case of Singapore, a person who is resident in Singapore for the purposes of Singapore tax;
Business Profits
- 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 attributable to that permanent establishment.
- An enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall be 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.
Dividends
If a dividend is paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in the other state.
However, such dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the law of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed:
- 10% of the gross amount of the dividends if the recipient is a company which owns directly at least 25% of the capital of the company paying the dividends;
- 15% of the gross amount of the dividends in all other cases.
Interest
- Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
- But such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 10% of the gross amount.
Termination
In Singapore
In respect of Singapore tax for the year of assessment beginning on or after 1 January in the second calendar year following the year in which the notice is given and subsequent years of assessment;
In Indonesia:
In respect of Indonesian tax for the tax year beginning on or after 1 January in the calendar year next following the year in which the notice is given and subsequent tax years.
In respect of Indonesian tax for the tax year beginning on or after 1 January in the calendar year next following the year in which the notice is given and subsequent tax years.
