Tax Treaty Indonesia – Singapore
- March 16, 2020
- Posted by: Administrator
- Category: Tax News
No Comments
The amendment of the Indonesia – Singapore tax treaty was signed on 4 February 2020. The tax treaty is not yet in force, because the amendment has not been ratified by the government.
The amendment introduces some changes to the tax rate for royalty and branch profit tax, and also regulates certain matters that were not regulated in the previous tax treaty, such as capital gains and tax avoidance.
Below are the salient points of the amended tax treaty:
| No | Topic | Current Tax Treaty | Amended Tax Treaty |
| 1 | Royalty | 15% |
|
| 2 | Branch Profit Tax | 15% | 10% |
| 3 | Capital Gains | Not regulated | It refers to the OECD Model.
There is a provision regarding indirect transfer of assets. Indonesia has the right to tax the profit from transfer of shares traded on the Indonesian Stock Exchange. |
| 4 | Anti-tax avoidance | Not regulated | Adopts the Multilateral Instrument (MLI) by including the purpose of a covered tax agreement.
Principal Purposes Test regarding prevention of tax treaty abuse is also formally included. |
| 5 | Exchange of information | Based on 1977 OECD Model | Based on 2017 OECD Model |
| 6 | Exception for Production Sharing Contract | The tax treatment received by a Singapore taxpayer must not be less favourable than that for any third state (“most favoured nation”). | The “most favoured nation” requirement is removed. |