The DGT has released circular letters to announce updates to certain articles in tax treaties between Indonesia and several jurisdictions: Mexico, Bulgaria, Romania, South Africa, and Hong Kong.

The salient points of the updates are, among others:

1.The reduced tax rate for dividends (Romania: 12.5%, and South Africa: 10%) now can only be granted if the 25% ownership requirement is met for at least 365 days immediately preceding the dividend payment date;

2.For the tax treaties with Mexico, Bulgaria, and South Africa, now the other country can only tax profits from the transfer of shares or similar rights, such as partnership interests or trust assets, if immovable property in that other country accounts for more than 50% of their value, directly or indirectly, within 365 days immediately prior to the transfer; and

3.For the tax treaties with Bulgaria, Romania, and South Africa, requests for Mutual Agreement Procedure (MAP) now must be submitted within three years from the date of the first notification regarding the action resulting in the imposition of tax that is not in accordance with the provisions of tax treaties with Indonesia.

To learn more on the details of these treaties and their relevance to your case, please contact a GNV member in connection with an assignment. We will be happy to assist you.